The momentum of privatization by listed companies in Japan is expanding. Since last year, there has been a marked increase in the number of listed companies that have been privatized through public market acquisitions.
As a representative company of Japanese manufacturing, Toshiba Corporation chose to accept a tender offer (TOB) jointly initiated by a group of Japanese companies led by a Japanese industrial partner (JIP), and was officially delisted at the end of last year. This news has not completely faded out of everyone's attention, and the famous Japanese pharmaceutical company Taisho Pharmaceutical Co., Ltd. recently announced that it has successfully implemented a management buyout (MBO) and intends to delist in March this year.
According to data published by Recof Data, a Japanese M&A consulting firm, the number of domestic management buyouts in Japan in 2023 reached a record high of 1.4 trillion yen due to the increase in the number of large Japanese companies implementing MBOs such as Taisho Pharmaceutical.
The Nihon Keizai Shimbun reported that more and more Japanese companies are implementing tender offers in order to complete their delisting goals. In 2023, the number of listed companies such as Toshiba and Taisho Pharmaceutical that have implemented public market acquisitions with the goal of delisting will reach 65, a 35% increase from the previous year and the highest since 2000.
* And experts said that the major shareholders and the market have more and more requirements and restrictions on listed companies, which overwhelms some listed companies, and they feel that the cost of listing is too high, which is an important reason why they finally choose to delist.
First of all, the existence of external major shareholders often becomes a constraint on the business decision-making of listed companies, and even makes them lose their sense of independence and autonomy, and their operational efficiency is low. This is also an important reason why Toshiba finally chose to go the path of privatization.
Toshiba finally chose to "return" to Japanese capital and delist, the most direct purpose was to get rid of the influence of outside directors, mainly foreign investors, on the company's management decisions. Toshiba believes that the completion of privatization will simplify the composition of shareholders and improve the efficiency of business decision-making, which will be conducive to Toshiba's revitalization.
When Taisho Pharmaceutical announced the implementation of the management buyout, it said that if the listing situation is maintained, the company's business decisions will still be transferred by the will of shareholders, and priority must be given to ensuring short-term investment returns, which will become "a constraint to the company's implementation of medium and long-term strategies", which is not conducive to the company's continued promotion of early investment, and also affects the company's thorough reform.
Secondly, the choice of delisting is also because the listed company is not subject to various rules, and believes that it restricts the company's development to a certain extent. For example, in recent years, the Tokyo Exchange has been promoting various reforms in order to make Tokyo** more attractive. In particular, the reform of the price-to-net value ratio (PBR) launched by the Tokyo Stock Exchange last year has put some companies under pressure.
As of the end of 2022, more than half of the companies listed on the Tokyo** Exchange had PBRs below 1x. In an effort to urge listed companies to pay attention to their share prices, the Orient Stock Exchange introduced new rules in March last year, requiring about 3,300 companies listed on major and standard markets to disclose specific reform measures by the end of the year. The Tokyo Stock Exchange regularly publishes a list of companies that have identified improvement plans.
Many companies have responded by buyback**, increasing dividends, optimizing their operations, and reforming their governance. According to the list of companies that have taken reform measures released by the Tokyo Stock Exchange for the first time, about 40% of companies have responded to the request to take measures to improve the return on capital. The move by the Tokyo Stock Exchange is considered to have significantly enhanced the investment value of Japan, and is an important background for Tokyo's return to the channel.
However, there are also some companies that choose to withdraw from the short-term stock price changes and the distribution of shareholders' interests in order to ensure that they can promote management reform from a medium- to long-term perspective.
Some experts pointed out that although reform is necessary, the most important thing is innovation. The most important ways to attract investors are to develop innovative products and leading technologies, expand sales channels, and increase profitability. In order to buy back ** and return profits to shareholders", some companies have siphoned a large amount of cash from the company without establishing a growth strategy, which is not conducive to the long-term development of the company.
Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, pointed out that the company's management has increased the burden on listed companies by requiring the company's management to improve capital efficiency and stock prices, and the choice of delisting has allowed them to travel lightly, and the company can promote management and structural reform more independently.
Yuko Yoshitomi, president of Recof Data, said that the number and amount of MBOs in Japan are expected to remain at a high level in the context of increasingly stringent requirements for listed companies by the market and investors. (Liu Chunyan).
Editor-in-charge: Li Yilei.