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Hostile bid subverts Japanese politeness

Oji Paper’s bid for rival Hokuetsu breaches a Japanese taboo on hostile takeovers. It has also prompted some extraordinary, perhaps illogical, defence tactics. Is this the shape of things to come in Japanese M&A? Chris Wright reports.

By Chris Wright


You know a deal has gone into uncharted territory when the bank advising on it feels obliged to make a public statement justifying its decision to provide that advice in the first place. That, and many other things, have made the protracted battle for Hokuetsu Paper Mills a controversial landmark in Japanese corporate behaviour.

The bank in question is Nomura, which is advising Oji Paper on a bid for Hokuetsu. Last month Nomura’s division CEO for global investment banking, Takashi Yanagiya, made a short statement explaining the factors the bank considers when deciding whether to be a company’s financial adviser, “including whether or not the deal will contribute to an increase in value for the company’s shareholders, other stakeholders, and the company itself, as well as whether it will contribute to the healthy development of the industry and the overall capital markets.”

What sort of bid could make a bank feel it needed to justify its behaviour like this? One of questionable economic rationale? Or one in an ethically shaky industry, like gambling or uranium? Nothing of the sort. The proposed deal is widely felt to be good for shareholders, in an industry as plain as they come: paper.

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