Japan’s Fledgling M&A Market Yet to
Steven Thomas, co-head of mergers and acquisitions (M&A) at UBS
in Tokyo, was surprised by the request from his human resources
department in spring 2005. UBS had stood at, or very near, the top of
Thomson Financial’s league tables for cross-border M&A activity in
Japan for much of the last 5 years.
Precious little could catch this unflappable English banker off
guard after the turmoil of Asian crises of the late 1990s. With graying
brown temples and wearing a dark, tailored suit in an expansive
wood-paneled conference room, he looks every inch the investment
bank veteran, having earned his stripes in the swift, large-scale
restructuring of the South Korean economy and the flurry of inward
*Genkan is translated as the entry-way to a Japanese house.
investment into troubled Japanese companies several years earlier.
His descriptions of the recent turf battles in Japanese corporate
finance have the refined air of a British infantry captain downplaying
his experiences in the trenches.
The HR request for a lecture to its own department on his hith-
erto esoteric business—the buying and selling of corporations—raised
his eyebrows. Why the new interest? When people in Tokyo found out
he was an investment banker, usually they asked him for stock picks,
not explanations of corporate tender offers and legal defenses. Japan-
ese M&A activity had yet to recover to 1999 levels in dollar terms,
when about 1,200 deals, totaling approximately $199 billion, had been
chalked up, according Thomson Financial. Indeed, many foreign
investment bankers were becoming frustrated as the promise of
money-making opportunities in M&A in the new millennium had not
yet been fulfilled. However, Thomas and other bankers were about to
find their arcane calling thrust into media circus spotlights.
It turned out that the human resources department members
were being bombarded by questions from their friends, who were
watching the takeover battle between Livedoor Co., Ltd., and Fuji
Television Network, Inc., on the morning news shows. “What is going
on?” their friends wanted to know.
The saga between Livedoor and Fuji TV was probably the high-
est-profile hostile takeover attempt ever to occur in Japan. Involving
a maverick businessman challenging a media giant, the spectacle of a
brash outsider taking on the system had the public enthralled. Fuji
TV had launched a tender offer for Nippon Broadcasting System,
Inc., in January with the goal of acquiring half of the outstanding
shares of the radio broadcaster by early March. However, Livedoor,
an Internet portal company owned by Takafumi Horie, stunned the
business community by suddenly announcing that it had acquired
35% of the outstanding shares of Nippon Broadcasting and was aim-
ing for a majority stake as well. Livedoor had acquired much of these
shares in off-hour trading financed by issuing convertible bonds to

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