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5 Hostile Takeover Battle in Japan: Fuji TV versus Livedoor for NBS On January 17, 2005, Fuji Television Network Inc.1 (Fuji TV), the centerpiece of the giant Fujisankei Communications Group (FCG),2 made a takeover bid for Nippon Broadcasting System Inc.3 (NBS).4 The move intended to make NBS, an AM radio station that owned 22.5% of Fuji TV, a consolidated subsidiary. Their plans were thwarted, however, by maverick CEO Takafumi Horie and his rapacious internet company, Livedoor Co.5 Livedoor had purchased more than a third of the NBS stock through off-floor trading (see Exhibit 1), a move that violated Japan’s unspoken yet accustomed rule against this type of backdoor business practice that was common in other parts of the world. The news that Livedoor, an internet company operating on the fringes of Japan’s corporate establishment, had bought such a large number of NBS shares came as a shock to Fuji TV’s management, many of whom were not even familiar with the company. Exhibit 1 Timeline of the Battle: Fuji TV, NBS, and Livedoor (2005) January 17 Fuji TV announces its plan of a takeover bid for NBS. February 8 Livedoor acquires more than one-third outstanding shares of NBS in off-floor trading, etc. February 23 NBS decides to issue new share warrants. February 24 Livedoor requests the Tokyo District Court to issue an injunction order against the issue of share warrants. March 8 Fuji TV announces that it has acquired approximately 37% of the NBS shares. March 11 Tokyo District Court issues an injunction order against the issue of share warrants by NBS. March 12 Livedoor warns the directors of NBS that the removal of crown jewels is illegal. March 15 Fuji TV announces that it will increase annual dividends five-fold. March 16 Livedoor announces that it has acquired more than 50% of the NBS shares on the voting rights base. Tokyo District Court rejects the NBS appeal. March 22 Fuji TV establishes a new issue frame of ¥50 billion. March 23 Tokyo High Court also decides against new share warrants. It decides that a discussion on corporate value is not proper for the court. March 24 NBS decides to loan its Fuji TV shares to SBI Holdings, which suddenly appears as a white knight. March 31 Three outside board members of NBS quit. April 18 Fuji TV and Livedoor reach settlement. ch_05(65-86).indd 65 2007/9/27 11:32:11 AM Cases on International Business and Finance in Japanese Corporations 66 Following the news of Livedoor’s hostile takeover bid on February 8, Fuji TV was informed on that day that Livedoor received ¥80 billion6 in financing from Lehman Brothers,7 a well-known US investment bank. Lehman Brothers used a special financing scheme consisting of MSCBs (moving strike convertible bonds) to fund the bid.8 The company was further informed that Livedoor’s purchase of NBS shares was the first step towards its ultimate acquisition target, Fuji TV.9 For a long time, takeovers of Japanese companies financed by US funds had been anticipated, and now those expectations had been realized. Executives at Fuji TV understood this was a battle between US and Japanese financing strategies. But this fight was not solely between the US and Japan, it was also a public challenge by an upstart internet company and its flamboyant CEO to the old media establishment and Japan’s traditional corporate culture. As such, it drew unprecedented attention from both the Japanese press and the Japanese public who were eager to see which company and, more importantly, which culture, would prevail. Company Profiles10 Fujisankei Communications Group had approximately 10,000 employees and 100 companies in the media and entertainment industry.11 This group claimed to be one of the world’s largest media groups. It was a loose keiretsu founded by the Shikanai family, who had seen its management control dissipate in the early 1990s. The group’s flagship business was the Sankei Shimbun, Japan’s leading national daily with a circulation of around two million. NBS, a national AM radio station located in Tokyo, was a core company in the Fujisankei portfolio. Incorporated in 1953, the company was led by its president, Akinobu Kamebuchi,12 a former disc jockey at NBS. Its first radio broadcast took place in 1954, and by 1959, it was on the air 24 hours a day. The company went public in 1996, and by 2005, it had become...

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