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Fair Acquisition Study Group Launched

November 18, 2022

With the aim of establishing a fair M&A market, the Ministry of Economy, Trade and Industry (METI) has launched the Fair Acquisition Study Group to discuss topics including ideal behaviors of related parties regarding acquisition proposals, and fair takeover defense measures.
Its first meeting was held today.

1. Background

Establishing a fair M&A market will promote acquisitions that increase corporate value, which in turn will contribute to growth of companies that want to use acquisition in Japan as a business strategy. It will also ensure that the management of companies to be acquired has opportunities to select optimal business strategies, and will help enhance external discipline for management.

METI has formulated guidelines and reports that present the best practices for takeover defense measures, MBO, and other matters, with the aim of increasing corporate value by promoting the formation of fair rules regarding acquisitions.

However, there have been various changes since those guidelines were formed. In recent years there has been a series of judicial decisions regarding the implementation and suspension of “emergency” takeover defense measures (types adopted only after a potential bidder appears), which are not covered in the current guidelines. There has also been an increasing number of cases in which a third party presents new options (counteroffers) after the initial takeover proposal, and opinions are divided over those proposals. In addition, companies tend to prefer overseas M&A investments over investments in Japan as investment method to achieve relatively quick returns by acquiring a company outside Japan that has proven a track record. Furthermore, the social and economic situations surrounding listed companies are also changing, examples of which are, reinforcement of boards of directors’ functions by having more independent outside directors, and changes of shareholding structures.

In light of the above trends and bearing in mind cases in which opinions of the acquirer(s) and target company about the proposed acquisition(s) are divided (e.g., unsolicited acquisitions, competing acquisitions), METI has established the Fair Acquisition Study Group to discuss topics such as ideal behaviors of related parties regarding acquisitions, in order to improve predictability and demonstrate ideal approaches for related parties, thereby making acquisitions that enhance corporate value more likely (and making acquisitions that do not enhance corporate value less likely).

2. Scope of this study group

This study group will discuss topics including 1) ideal behaviors of related parties regarding acquisition proposals (establishing what views and actions should be taken by the acquirer and the target company's board of directors from the viewpoint of increasing corporate value), and 2) fair takeover defense measures (arranging issues based on recent judicial decisions and organizing ways of thinking over controversial issues), bearing in mind cases in which opinions of the acquirer(s) and target company about the proposed acquisition(s) are divided (e.g., unsolicited acquisitions, competing acquisitions).

3. Date

The study group's first meeting was held at the date and time below.

First meeting: November 18 (Fri.), 2022, 5:30 p.m. to 7:30 p.m.
(The meeting was held in private, but a summary of the meeting will be published on the website at a later date.)

* Meetings will be held approximately once a month from the second one and the group will then examine the above points, aiming to summarize the discussions and formulate (or revise) guidelines by next spring.

4. List of members

Please refer to the attachment: List of Study Group Members (in Japanese)

Division in Charge

Corporate System Division, Economic and Industrial Policy Bureau