JAPAN Trends and Developments Contributed by: Haseru Roku, Nagashima Ohno & Tsunematsu
The most significant change is the removal of the general exemption for on-market transactions from tender offer regulations. Under the revised law, acquirers exceeding certain shareholding thresholds are required to conduct tender offers regardless of whether the transaction is made on or off market. This change addresses concerns about acquirers attempting to gain control of tar- get companies without conducting tender offers by gradually accumulating shares on the market, which could coerce minority shareholders. Additionally, the threshold triggering the require- ment for a tender offer has been lowered from one-third to 30%, aligning with thresholds in many other countries. The Automotive Industry: Seismic Changes Due to the “EV Shift” Japan has traditionally been known as an auto- motive powerhouse, but it is lagging behind in the global “EV shift” – the transition from gaso- line vehicles to electric vehicles (EVs). This delay is significantly impacting automakers and manu- facturers within their supply chains, serving as a driving force for M&A transactions. Formation of new alliances In August 2024, an alliance was announced among three major Japanese automobile manu- facturers, HONDA MOTOR (“Honda”), NISSAN MOTOR (“Nissan”), and MITSUBISHI MOTORS CORPORATION (“Mitsubishi Motors”). The three companies aim to standardise key components for EVs, including in-vehicle software, motors, and batteries. By late December, Honda and Nis- san took a further step and announced that they have begun discussions on a potential merger (business integration), while Mitsubishi Motors indicated it might also participate. With the for- mation of this alliance or the possible merger, Japan’s automotive industry will be reorganised
into two major groups: the Toyota group – which includes Suzuki, Mazda, Daihatsu, and SUBARU – and the three-company alliance of Honda, Nis- san, and Mitsubishi. In the global EV market, US manufacturers like Tesla and Chinese compa- nies such as BYD are making massive invest- ments all over the world. Japanese automakers are expected to engage in more M&A deals and collaborate with overseas EV manufacturers in order to counter this and remain competitive. Reasons for Japan’s delay in EV adoption One reason cited for Japanese automakers falling behind in EVs is the lack of strong gov- ernmental commitment to promote EVs, unlike other countries that have enacted laws to boost EV manufacturing and sales. In 2021, the Japa- nese government declared its goal of making all new car sales “electrified vehicles” by 2035 to achieve carbon neutrality by 2050. Howev- er, “electrified vehicles” in this context include hybrid vehicles (HVs), which differ from pure EVs. As a result, Japanese automakers were slower to transition to EVs compared to their international competitors, with an EV penetration rate of only about 3% in 2024. This is extremely low com- pared to China’s 38%, Europe’s 21%, and even the United States’ 7%. Global EV policies and their impact on Japanese automakers Europe has declared that it will ban the sale of new gasoline and diesel vehicles, including plug- in hybrids (PHVs) and HVs, by 2035, moving entirely to EVs. In the United States, the Biden administration issued an executive order aiming for an EV adoption rate of over 50% by 2030. China refers to EVs, PHVs, and fuel cell vehi- cles (FCVs) collectively as New Energy Vehicles (NEVs) and has set a goal of achieving a NEV penetration rate of over 50% by 2035.
216 CHAMBERS.COM
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