Japan’s Gradual Transformation
Edited by Luke Nottage, Leon Wolff and Kent Anderson
Chapter 7: Streamlining the Market for Corporate Control: A Takeovers Panel for Japan?
Geread Dooley Japan Inc. has been shaken, its foundations jolted. The person primarily responsible is Takafumi Horie. In 1996 Horie dropped out of Japan’s prestigious University of Tokyo and founded Livin’ on the Edge, a website design consultancy company, with just US$52 000. Employing an unheralded mergers and acquisitions (M&A) strategy the brash entrepreneur engineered the purchase of more than 50 companies. Such raw capitalism and entrepreneurial vitality has rarely been seen in post-war Japan. By December 2005 the company, now known as ‘Livedoor’, had a market value of US$7 billion (based on annual sales of just US$661 million for 2005). Horie had acquired celebrity status. Spurred on by Horie’s aggressive manoeuvres and abrupt success, the unthinkable has occurred: takeover activity is on the rise in Japan – a country famous for the illiquidity of its stock exchange and tightly held companies. Unintended consequences have occurred. Japanese corporate conventions such as relationship-based business decisions and the veneration of organic growth have been challenged. Corporate Japan, some say intent on preserving the status quo, has used Horie’s challenge as a pretext for implementing management-preserving corporate rules, including versions of the notorious US-style ‘poison pill’ defences (Milhaupt, 2005a, p. 2171). The poison pill defence – especially in the Anglo-Commonwealth tradition – is often regarded as a pro-management device capable of locking-in insular boards, prone to inhibit the market for corporate control. Undeterred, Japanese lawmakers have partially endorsed the poison pill. As outlined in this volume’s Chapter 8 by Kamiya and Ito,...
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