JAPAN PREPARES FOR A TAKEOVER SPLURGE Contrary to received wisdom, mergers and acquisitions have long been a feature of the Japanese business scene. The local business landscape is littered with the debris of takeover coups -- some successful, others not -- by predatory Japanese companies. Predictably, no foreign company has so far succeeded in taking over a listed Japanese corporation. The recent bid by the Trafalgar Holdings and Glen International consortium to acquire Minebea -- an aggressive Japanese ball bearing and electronics manufacturer -- illustrates graphically some of the barriers which must be overcome to succeed in such a venture.
Trafalgar/Glen's takeover strategy was to accumulate Minebea warrants and convertible bonds issued in the Euromarkets. While this tactic allowed the consortium to corner a hypothetical 23% stake of Minebea's outstanding shares without attracting much attention, neither warrants nor convertible bonds represent ownership until converted to equity. It was here that the foreign takeover bid ran aground.
Japan's 1981 Foreign Exchange Law specifies that non-residents may not acquire more than a 9.9% holding in any Japanese company without prior approval from the Ministry of Finance. Although Trafalgar/Glen had purchased warrants and convertible bonds representing a 23% stake in Minebea, they were banned from converting more than 9.9%