Japanese shareholders block M&A

I know that it is good news that Japanese people are starting to do more personal investing, buying stocks, enabling the growth of the Japanese stock market. It's also good news that Japanese investors are becoming more active, in fact for the first time voting to block a takeover bid. It's more interesting to note that the investment fund that launched the proxy fight against the takeover is Ichigo Asset Management, run by ex-Morgan Stanley Japan MD, Scott Callon.

Investment fund Ichigo Asset Management launched the rare proxy fight against what it saw as an unfair share swap ratio for Tokyo Kohtetsu, a small but highly profitable maker of steel sheets and H-beams.
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Unlike in the West, where shareholder revolts are not unusual, Japan's corporate culture has been traditionally based on consensus between management, employees and customers, with shareholders having little say in shaping policy.
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Ichigo, a one-year-old fund whose portfolio of tiny Japanese companies is worth 3 billion yen ($25 million) and which owns 12.6 percent of Tokyo Kohtetsu, had not been against the takeover per se, only against the merger ratio.
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Mergers and acquisitions are sharply on the rise and activist hedge funds are forcing companies to increase returns and seek white knights. Japan has also recently seen the advent of management buyouts and hostile takeover attempts by established firms.

"I think (the vote) will have a positive impact on future M&A, it sends the message that such unfair offers are unacceptable," said Yoshihisa Okamoto, senior vice president at Fuji Investment Management.

I do wish that it had not taken until 2007 for these trends to come to pass. Let's hope we see more active investors in Japan in the future.

I do love the fact that Nippon Steel and Mitsui probably thought that they could ram through this joke of an acquisition and that they were denied by the shareholders. Just wait until your the investors in Nippon Steel or Mitsui start getting activist.

A First in Japan: Shareholders Block a Takeover - New York Times