2004 Articles

Prescribing the Pill in Japan? Foreword to the Hostile M&A Conference Issue

Milhaupt, Curtis J.

Contrary to popular belief, corporate Japan is changing–incrementally, to be sure, but changing nonetheless. One of the areas of greatest potential change is the legal and business environment for mergers and acquisitions (“M&A”), including hostile M&A. Recent amendments to Japan’s Commercial Code in the areas of stock swaps and divestitures are helping to facilitate M&A transactions. At the same time, the constellation of shareholders in Japanese firms is changing as cross-shareholding declines and foreign investment increases. M&A activity in Japan has increased significantly in recent years. While virtually all of the recent deals have been friendly, there have been several prominent examples of unsolicited bids, by both foreign and Japanese bidders. In the space of a few years, hostile takeovers of Japanese firms have gone from the unthinkable to the distinctly possible. It is possible that over the next few years, such transactions will become a small but meaningful feature of the Japanese corporate governance landscape. The symposium was designed to achieve a deeper understanding of the current legal and business environments for hostile M&A and defensive measures in Japan, and to glean possible lessons from the U.S. experience with hostile takeovers.