Article
Murakami Eyes Takara
by Darren Pierce : Radar, Radar! : 01.16.05 2:43pm EST
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The infamous Yoshiaki Murakami has taken aim at Takara, it was learned Thursday. Over the last four months, his Murakami Fund has bought 10% of Takara's outstanding shares, making it Takara's second largest outside investor behind Konami.
Murakami, an ex Ministry of International Trade and Industry bureaucrat, is considered a maverick activist and something of a cause célèbre in Japan. He's made big news in the financial world since his historic 1999 hostile takeover bid of Shoei Real Estate -- the first ever hostile takeover bid of one Japanese company by another.
Why did he do it? Is he an "American style corporate raider" as some suggest? He fully admits he is out to make a bundle of cash for his two management funds, but his deeper motivations seem to be driven from higher ground. Japanese public companies have a lingering problem with ignoring stockholders, paying low dividends, and holding market caps highly out of sync with corporate assets.
As president of M&A Consulting, Murakami wants to change that tradition. In true activist fashion, his direct efforts have been largely failures, but his success and fame come from the awareness he's generated in the public over these issues. Corporate governance is, thanks to him, now a common word in the Japanese media.
His pattern is well known. When Murakami went after Shoei, their total stock was worth $66M, but they held $570 in assets. His famous ploy to strong-arm Tokyo Style was similar -- they had a market cap of $890M but sat on $1B in cash alone. Typically, Murakami engages the outstanding stock of small and middle sized companies rich in cash, but paying small dividends. As a major shareholder, he demands the company pay better dividends, and is ignored. Then, he launches a takeover.
It's not easy. The Japanese system is designed to prevent such takeovers. The historically friendly and non-aggressive members of Japan, Inc have developed a system partly engineered to prevent foreign takeovers and to keep the waters of finance and mangement calm and stress-free. In Japan, raiders are seen as greed-driven cowboys out to make a quick buck rather improve long term forecasts.
Murakami thinks the traditions of the past will change. "We're in a transitional phase. In Japan, change starts out slowly but then accelerates," says the mergers and acquisitions gadfly, listed by CFO Magazine as one of the 100 major influencers on global business.
What wrenches will he throw into the works at Takara? Currently, Konami is butting heads with Takara's president, and largest single shareholder, Keita Sato, over long term strategy. Sato sees Takara's future in product diversification, while Konami has been pushing harder and harder for constriction since their involvement. This likely foreshadow's Murakami's angle. The press is expecting a shareholder proposal for a management gutting, and Sato may not resist. Sato has already stated he'll take full responsibility if Takara's poor performance in 2004 doesn't turn around in 2005.
Another bid at a takeover is unlikely. Murakami has learned the hard way that a company's existing keiretsu shareholders, often banks, aren't always amenable to selling out, and Takara's high price/book ratio make the gamble look unattractive all around. In any case, time will tell. Whatever Murakami does makes news.
Murakami, an ex Ministry of International Trade and Industry bureaucrat, is considered a maverick activist and something of a cause célèbre in Japan. He's made big news in the financial world since his historic 1999 hostile takeover bid of Shoei Real Estate -- the first ever hostile takeover bid of one Japanese company by another.
Why did he do it? Is he an "American style corporate raider" as some suggest? He fully admits he is out to make a bundle of cash for his two management funds, but his deeper motivations seem to be driven from higher ground. Japanese public companies have a lingering problem with ignoring stockholders, paying low dividends, and holding market caps highly out of sync with corporate assets.
As president of M&A Consulting, Murakami wants to change that tradition. In true activist fashion, his direct efforts have been largely failures, but his success and fame come from the awareness he's generated in the public over these issues. Corporate governance is, thanks to him, now a common word in the Japanese media.
His pattern is well known. When Murakami went after Shoei, their total stock was worth $66M, but they held $570 in assets. His famous ploy to strong-arm Tokyo Style was similar -- they had a market cap of $890M but sat on $1B in cash alone. Typically, Murakami engages the outstanding stock of small and middle sized companies rich in cash, but paying small dividends. As a major shareholder, he demands the company pay better dividends, and is ignored. Then, he launches a takeover.
It's not easy. The Japanese system is designed to prevent such takeovers. The historically friendly and non-aggressive members of Japan, Inc have developed a system partly engineered to prevent foreign takeovers and to keep the waters of finance and mangement calm and stress-free. In Japan, raiders are seen as greed-driven cowboys out to make a quick buck rather improve long term forecasts.
Murakami thinks the traditions of the past will change. "We're in a transitional phase. In Japan, change starts out slowly but then accelerates," says the mergers and acquisitions gadfly, listed by CFO Magazine as one of the 100 major influencers on global business.
What wrenches will he throw into the works at Takara? Currently, Konami is butting heads with Takara's president, and largest single shareholder, Keita Sato, over long term strategy. Sato sees Takara's future in product diversification, while Konami has been pushing harder and harder for constriction since their involvement. This likely foreshadow's Murakami's angle. The press is expecting a shareholder proposal for a management gutting, and Sato may not resist. Sato has already stated he'll take full responsibility if Takara's poor performance in 2004 doesn't turn around in 2005.
Another bid at a takeover is unlikely. Murakami has learned the hard way that a company's existing keiretsu shareholders, often banks, aren't always amenable to selling out, and Takara's high price/book ratio make the gamble look unattractive all around. In any case, time will tell. Whatever Murakami does makes news.