In lieu of an abstract, here is a brief excerpt of the content:

7 Nireco Japan: Introduction of the Poison Pill It has long been believed that hostile takeover bids had little chance of succeeding in Japan. This perception changed in early 2005 with the takeover battle for Nippon Broadcasting System Inc. (NBS), fought between Livedoor Co. Ltd. and Fuji Television Network Inc. (Fuji TV).1 It was a high-profile case that attracted much media attention because it was the first domestic takeover bid (TOB) to use American-style merger and acquisition (M&A) tactics in Japan. With the battle for NBS, the threat of hostile takeovers had become a reality in Japan. In February 2005, Hidemaru Yamada, president of Nireco Corporation2 thought this incident would trigger hostile takeovers of Japanese companies, particularly by American firms3 (see Exhibits 1, 2, 3, and 4 for information on Nireco). Fearing that Japanese companies would be swallowed by foreign investors, Yamada thought his company needed to introduce “poison pill” defenses as a means of countering hostile takeover bids (see Exhibit 5).4 Exhibit 1 Basic Data of Nireco Location 2951-4, Ishikawa-machi, Hachioji,Tokyo 192-8522 Japan Telephone 0426-42-3111 Industry Electric Appliance Established November 4, 1950 President President Hidemaru Yamada Number of Employees 225 Average Age of Employees 40.7 years Listed JASDAQ Listed Since October 27, 1989 Capital ¥3,072,350,000 Source: “Nireco (6863),” Yahoo! Japan, http://profile.yahoo.co.jp/biz/fundamental/9893.html. ch_07(99-117).indd 99 2007/9/27 11:32:48 AM Cases on International Business and Finance in Japanese Corporations 100 Hidemaru Yamada: Imperatives for Introducing Takeover Defenses President Yamada saw the Fuji versus Livedoor saga as an opportunity for his company to rethink the relationship between companies and their shareholders.5 He believed that a big factor behind the looming threat of hostile takeovers was the dissolution of crossshareholdings that began in the 1990s, particularly between main banks and corporate borrowers. As a result of this uncoupling, Nireco’s share of stable shareholders6 fell from 62% to about 58% between 1999 and 2005 (see Exhibit 6). On the other hand, foreign ownership of Nireco, which used to account for no outstanding shares, had risen to 8.91% (see Exhibit 7). The increase in the proportion of free-floating shares, including foreign ownership not yet registered,7 meant that buying out Nireco through TOBs had become easier. He was also concerned that shares of Japanese companies were relatively inexpensive, making it an opportune time for foreign parties to buy Japanese companies.8 On February 1, 2005, the average stock price in Japan was ¥11,330,9 just 29.11% of its peak price of¥38,915.87 in 1989 (see Exhibit 8). On February 1,s 2005, Nireco’s stock price was ¥832, a mere 39.6% of its 10-year peak of ¥2,100, which it reached on June 26, 1996. The company currently known as Nireco made its start in 1921 when a German enterprise under the name Askania Werke AG established a Japanese subsidiary called Askania. Five years after its founding, Askania reorganized to become a joint-stock corporation, at the same time redirecting its business activity from importing to domestic production of hydraulic-jet-pipe automatic control systems. Eventually, Askania was renamed Nippon Regulator; at this point, based on manufacturing experience and technological know-how gained during the Second World War, the company became a developer and manufacturer of process automation systems, carving a name for itself as a pioneer in automatic control systems. In 1984, the name was changed to Nireco, and until today, the company has been actively involved in the development of industry in Japan. Today, factors such as the effective use of resources, energy conservation, automation, and standardization are indispensable for industries, and Nireco has been able to effectively implement automatic control. Nireco had long provided a wide range of control and measuring systems for the printing, iron, steel, and agriculture industries. The product lines boasted an array of tension-control systems for web printing and steel strip manufacturing, and also included automatic-register control, print-quality inspection, gluing, nearinfrared analyzing, image-analysis, hydraulic/pneumatic control, automatic marking, and storing systems. All were designed to give total support to various production processes. Timeline 1950 Nippon Regulator Co. Ltd. established in Chuo-ku, Tokyo 1961 Subsidiary Chiyoda Seiki Co. Ltd. established 1972 Subsidiary Nireco Service Co. Ltd. (currently Nireco Keiso Co. Ltd.) established 1979 Head office opened in Hachioji, Tokyo 1984 Corporate name changed to Nireco Co. Ltd. 1989...

Share