Two upstart Internet companies that each waged hostile takeover bids for much larger established media companies may have permanently jolted Japan, Inc. into a new era of shareholder activism.
The takeover war -- launched by Livedoor Co. for Nippon Broadcasting System and its partner, Fuji TV, followed by Rakuten Inc.'s pursuit of Tokyo Broadcasting System -- were the hottest topics in Tokyo business news this year. In the end, both challengers enjoyed only limited success, but Livedoor and Rakuten will have a long-term impact on the corporate structure of Japan by emboldening other shareholders to take a more active role in corporate governance, according to Wharton faculty.
"The Livedoor-Fuji takeover battle was an extremely interesting watershed event for corporate governance in Japan," says Wharton finance professor Ayako Yasuda. "Even though it ultimately failed, more attempts are coming."
Livedoor flamboyant chief executive, Takafumi Horie, rattled corporate Japan in March when he attacked Nippon Broadcasting System, the radio division of Fujisankei Communications. The group also owns the nation's largest television broadcaster, Fuji TV, through cross-shareholding. Livedoor's true target was Fuji TV, but after NBS was able to block the takeover bid, Livedoor proposed an amiable settlement. The companies agreed to create a joint committee to consider ways the two firms could integrate some of their businesses. The negotiations so far have failed to produce concrete proposals.
In October, Rakuten, Japan's second-largest Internet portal beyond Yahoo Japan Corp., announced it had purchased 15% of Tokyo Broadcasting, the nation's third largest television network. Rakuten later increased that share to 19% and demanded merger talks. At the end of November, both companies signed a peace pact in which Rakuten promised not to exercise voting rights on its stock in return for negotiations about possible business tie-ups.
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