Activists push Japan Inc to its ‘great tipping point’, says Suntory head

Stay informed with free updates

Simply sign up Japanese Business and Finance myFT Digest — delivered straight to your inbox.

The head of Japan’s largest association of company leaders says the country has reached a “great tipping point” in corporate change as a critical mass of shareholder activists forces companies to wake up from a decades-long slumber.

The comments by Takeshi Ninami, president of Japanese drinks group Suntory and president of the influential Japan Association of Corporate Executives, came at the end of a year in which a record number of foreign and domestic activist funds bought a record number of Tokyo-listed stocks. .

Activist funds, eg Elliott Management And ValueAct, has become bolder in its choice of targets – a list that now includes Japan’s largest property developer, Mitsui Fudosan, and automaker Nissan.

Under pressure from activist investors, the past year has also produced a sharp rise in the price of unsolicited takeover bids — a tactic once considered taboo, but now allowed by the government through changes to merger guidelines.

In an interview with the Financial Times, Ninami spoke of this euphoria activism And its impact on Japan’s chief executives has ended the country’s decades of stagnation, inflation and corporate inertia.

“The lost 30 years are over, and we face a great tipping point. It has to be positive,” said Ninami, who predicted that activism, private equity and domestic consolidation would continue to grow in 2025.

“It’s an important issue for Japan to be more efficient, more productive and more profitable,” said Niinami, who added that Japanese management will now be forced to focus more on the metrics that investors care most about, such as cost of capital. and return on equity.

The race is now on, Ninami said, for chief executives to reshape their companies before an employee tells them to. D Unsolicited bid for seven and I Canada’s alimony is bet by Couche-Tard, he said.

“This message is very important for all CEOs to want to think what’s wrong with my company? If there is something wrong, we have to fix it, otherwise there is a huge warning from our leaders and activists. Sleeping companies will wake up now,” said Ninami.

Apart from ACT’s unsolicited $38bn bid for Japan’s biggest convenience store operator, the 2024 deals included Nidec’s $1.6bn attempt to “handover without consent” and a tussle between private equity giants KKR and Bain over the IT services group. Fuji Soft.

Nicholas Smith, Japan Strategist at CLSA Securities, said Japan Already the second largest market for private equity and activism globally. Japan accounts for two-thirds of Asian activist events, he said, and counting.

“Globally, value investors and event traders are looking with interest at the Seven and I trade as a potential reservoir for Japan’s rapid evolution into a market for corporate control,” Smith said.

But the transformation of Japan’s stock market, investment bankers and other deal advisers warn, should be seen as a fragile process. Jeremy White, an M&A partner at law firm Morrison Foerster in Tokyo, said the number of shareholder clashes or unsolicited bid stories could still decline in 2025.

“I think that would indicate that there is enough friction in the market to stop what has come to look like a direction of travel. I think what we have now is a velocity going in one direction: it doesn’t need to go in the opposite direction, just applying the brakes would be bad enough,” White said.