Suntory Head Says Activists Have Pushed Japan Inc. To ‘Bigger Edge’

Get free updates

Register easily Japanese business and finance myFT Digest — delivered straight to your inbox.

The head of Japan’s largest association of company executives has said the country is at a “tipping point” in corporate transformation, where radical shareholder activism has forced companies to wake up from decades of slumber.

The comments by Takeshi Niinami, president of Japanese drinks group Suntory and chairman of the influential Japan Corporate Executives Association, came at the end of a year in which a record number of foreign and domestic activist funds bought Tokyo-listed stocks. .

Activist funds like Elliott Management and ValueAct, have also become bolder in their choice of targets – a list that now includes Japan’s biggest property developer Mitsui Fudosa and automaker Nissan.

Under pressure from activist investors, it also saw a sharp rise in the price of takeover bids last year – a practice once considered illegal but now approved by the government under changes to merger guidelines.

In an interview with the Financial Times, Ninami said it has increased. Movement And its impact on Japan’s CEOs has ended decades of stagnation, inflation and corporate unrest in the country.

“It’s been 30 years, and we’re at a tipping point. That should be positive,” Ninami predicted, predicting that activism in private equity and domestic consolidation will increase in 2025.

“It’s a tipping point for Japan to become more effective, more efficient and more profitable,” Niinami said, adding that Japanese management now has an obligation to pay more attention to metrics that investors care about the most, such as the cost of capital. And return with justice.

The race is now on for CEOs to shape their companies before an activist tells them to do so, Ninami said. of For seven and no Canada’s Alimony Commission said Tard had outlined the issue.

“This message is very important to prompt all CEOs to think what is wrong with my company? If there is a mistake, we need to correct it or we will have a big warning from activists. Sleeping companies will wake up now,” said Ninami.

In addition to ACT’s $38 billion unsolicited bid for Japan’s largest department store operator, the 2024 deals include Nidec’s $1.6 billion “unlicensed takeover” of Makino Milling and a battle between private giants KKR and Bain over IT services groups. Fuji smooth.

said Nicholas Smith, Japan strategist at CLSA Securities. Japan It was the second largest market for private equity and activism globally. Japan accounts for two-thirds of Asia’s activists, he said, and is pulling ahead even more.

“Globally, value investors and event traders are looking at the Seven and are eagerly trading as a watershed for Japan’s rapid evolution,” Smith said.

But the turnaround in Japan’s stock market, investment bankers and other deal advisers warn, should be seen as a slow process. Jeremy White, an M&A partner at the Tokyo-based law firm Morrison Foerster, said the number of shareholder conflicts or unsolicited bid stories could decline by 2025.

“I think this suggests that there is enough misunderstanding in the market to stop what appears to be a direction of travel. I think we’re on a certain trajectory now. That doesn’t have to go into reverse, just apply the brakes,” White said.