Japan is taking steps to broaden companies’ options for using their own shares in acquisitions, aiming to facilitate more global deals, as reported by Nikkei.
Changes proposed for 2025 to the Companies Act would enable “share delivery” to acquire stakes in foreign companies. This method allows buyers to offer their own stock as consideration for acquisitions, even if the target company does not become wholly owned.
While this move is poised to lower financial burdens for Japanese companies, particularly startups, by leveraging their own equity instead of cash, it raises a critical question: would shareholders in overseas companies want to receive Japanese shares as consideration?
Despite Japan’s strong market and economic stability, international shareholders might prefer more familiar and liquid assets. Factors like currency fluctuations, corporate governance differences, and varying market conditions can make Japanese shares less appealing to foreign investors.
With cross-border M&A deals on the rise and Japan’s yen weakness making cash payments less attractive, allowing stock use in acquisitions could be a game-changer. Yet, the preference and trust of global shareholders remain uncertain.
As we watch these developments, it’s crucial to consider how these changes will impact the attractiveness of Japanese shares in the global market and ensure value creation for all stakeholders involved.
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