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Off to the races: hostile bidders look to Japan

For anyone contemplating a hostile takeover in Japan, there was traditionally only one piece of advice: don’t do it. 

And it wasn’t hard to figure out why. Previous attempts have mostly failed, ruining the reputation of the hostile bidders. Even if you wanted to launch an unsolicited bid, it was nearly impossible to find bankers and lawyers willing to act on behalf of the aggressor. 

Stephen Schwarzman, Blackstone Group chief executive and co-founder © REUTERS

Yet, Stephen Schwarzman got a surprising answer when he came to some of Japan’s most powerful and well-connected business leaders last year with a genuine question: if the deal rationale could be explained in full, was the country now ready for a foreign fund or private equity group to mount an unsolicited bid for a listed Japanese company?

While no unsolicited bid for a large business by a company without an existing stake had ever succeeded in Japan, the founder of Blackstone was told the tide against hostile bids was rapidly changing, as the FT’s Kana Inagaki and Leo Lewis report from Tokyo.

Escalating shareholder activism, corporate governance reform, and revisions to M&A guidelines in recent years, have weakened past resistance, prompting big companies, including trading house Itochu and laser products group Hoya, to mount unsolicited bids for domestic businesses.

Management buyouts of Topix-listed companies rise

In September, Colowide succeeded in its takeover of popular restaurant chain Ootoya, while bankers say the $2bn unsolicited takeover bid by the Nitori chain of home centres for smaller rival Shimachu in October could be a “meaningful catalyst” for change in the Japanese M&A market. 

In the wake of these changing perceptions, at least three global investment banks and three of Japan’s biggest law firms say they are now open to playing an advisory role for hostile bidders. 

To be sure, Japan’s approach to unsolicited bids remains cautious and sensitive, with many investment banks wary of publicly stating their policy on the matter. But it will be interesting to see whether we’ll see more of these cases in 2021 and beyond, and the effect they will have in unlocking the value of Japanese companies. 

The SoftBank Spac has landed 

Did we really think we were going to close out 2020 without SoftBank getting in on the hottest trend of the year? 

Masayoshi Son’s conglomerate has officially launched a special purpose acquisition company

We’ve known since early October that the Japanese group was planning a Spac, after Rajeev Misra, the head of SoftBank’s $100bn Vision Fund, told virtual attendees at the Milken Institute Conference about its plans to launch one.

But on Monday, SoftBank finally dropped its S-1 filing with plans to raise up to $604m through the blank-cheque listing. The vehicle, which is called SVF Investment Corp, is sponsored by SoftBank Investment Advisers (SBIA). 

Now that’s out of the way, let’s dig into the Spac filing. At certain points DD was left wondering whether a certain former SoftBank-backed company chief had written some of the lines:

“SoftBank’s corporate philosophy comes with the wish that people around the world will lead happier, more fulfilling lives through the technology-empowered products and services its ecosystem provides.”

Masayoshi Son, chairman and chief executive of SoftBank Group © Bloomberg

Most DD readers won’t find it surprising that SoftBank is targeting technology companies. That is, after all, its bread and butter. 

The Spac filing seems to focus heavily on artificial intelligence. But the list of industries is more comprehensive. It includes telecommunications, robotics, software and financial technology as possibilities. 

Take that with a pinch of salt though. Lower down, SoftBank clarifies that it has the right to buy whatever it wants. That includes companies that SoftBank or its affiliates have an interest in. This is the fun part. 

“In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors or executive officers, although we do not intend to do so, or we may acquire a target business with one or more affiliates of SBIA and/or one or more investors in funds managed by SBIA,” the filing states. 

This is important because earlier reports suggested that SoftBank would be solely pursuing companies outside of its investment book. 

What would really be the icing on the cake is if SoftBank took its former crown jewel WeWork — which made it close to a listing, but not close enough — public via a Spac. We won’t hold our breath. 

Dublin-on-Thames: London’s financiers look to life after Brexit

The City of London has never been a Brexiter hotspot. Ahead of the 2016 poll, the lobby group City UK, representing banks, insurers and asset managers, found 84 per cent of its members backed remaining in the EU and only 5 per cent wanted to leave.

But the intervening four and a half years have given its executives time to get ready — and now, with Brexit negotiations on a knife-edge in their final stages, they are starting to see some potential advantages to a future outside the bloc. 

DD’s Kaye Wiggins and the FT’s Stephen Morris, Laurence Fletcher and Laura Noonan spoke to some of the City’s biggest names just weeks before the Brexit deadline, for the latest piece in an FT series on the future of the City. It’s fair to say memories of Margaret Thatcher and her deregulatory Big Bang loom large in their post-Brexit visions.

Bar chart of Share by region in 2018 (%) showing Global financial activity

“London has to get that playbook out from 1980-85,” said Richard Gnodde, head of Goldman Sachs’ international arm. 

Among the EU regulations some people — such as former Bank of England governor Mervyn King — have had enough of are Mifid II and the EU banker bonus cap, a post-financial-crisis rule that limits year-end payouts to twice a banker’s salary.

For Barclays chief executive Jes Staley, the real threat to London is not Paris, Frankfurt or Milan, but New York, Singapore and Hong Kong. London should take advantage of its new regulatory freedom, he says.

Jes Staley, chief executive of Barclays © Bloomberg

Low tax is also on the post-Brexit wish list. London should be “Dublin-on-Thames”, matching Ireland’s 12.5 per cent corporate tax rate to attract more multinationals, says Sir Paul Marshall, co-founder of the $50bn hedge fund Marshall Wace

“If we really wanted to steal a march on our European friends, you’d make us the offshore [centre],” says William Jackson, managing partner of €26bn private equity group Bridgepoint

He believes the proponents of tax cuts might get their way: “I don’t think we’ll see the true colours of this government until we get through this Brexit negotiation, but the mood music is very positive.” 

Job moves

  • Former ExxonMobil chief Lee Raymond has resigned from the board of JPMorgan Chase following sustained pressure on the bank from climate activists and investors. More here.

  • Anastassia Lauterbach resigned from her role as a non-executive director of the low-cost carrier easyJet with immediate effect following scrutiny over her role at Wirecard, the collapsed German payments company. More here.

  • Raymond James has hired Terry Huffine as a managing director in its consumer and retail unit within its European investment banking practice. He joins the London office from Baird, where he led the European consumer goods practice.

  • Barclays retail bank chairman Ian Cheshire is stepping down after four years at the UK lender. He will be replaced by Crawford Gillies, a senior independent director on the board.

  • Brunswick Group has hired Tom Deegan as a partner based in Hong Kong. He will join the firm in January after serving as general counsel of Saudi Arabia’s Public Investment Fund.

Smart reads

White glove service A private Luxembourg bank frequently went above and beyond to appease its most valued client, Mohammed bin Zayed, the crown prince of Abu Dhabi. (Bloomberg)

Love is blind Former Bloomberg News reporter Christie Smythe and her husband lived, by her telling, “the perfect little Brooklyn life”. Until a dynamite scoop on the internationally reviled “Pharma Bro” provocateur Martin Shkreli sparked into something else — romance. (Elle)

Extending the olive branch Jack Ma was ready to negotiate his return from financial exile with the Beijing regulators that froze his fintech empire’s would-be $37bn IPO. How? By offering chunks of Ant Financial as a peace offering to the Chinese government. (WSJ)

News round-up

Thoma Bravo agrees to buy RealPage in $10bn deal (FT)

Defensive all-share mergers: desperate measures (Lex)

Affirm gears up for IPO amid growing competition (#FintechFT)

MGM Holdings, studio behind ‘James Bond,’ explores a sale (WSJ)

Remo Ruffini shows Moncler is more than just puff with €1bn Stone Island deal (FT) 

Payments operator criticised over Wirecard legal move (FT) 

Boohoo appoints PKF Littlejohn to replace PwC as auditor (FT)

Credit Suisse chief vows a ‘clean slate’ in 2021 (FT)

Co-op Bank calls off sale talks with Cerberus (FT) 

Vestas invests €500m in new wind farm partnership (FT)

Due Diligence is written by Arash Massoudi, Kaye Wiggins and Robert Smith in London, Javier Espinoza in Brussels, James Fontanella-Khan, Ortenca Aliaj, Sujeet Indap, Eric Platt, Mark Vandevelde and Francesca Friday in New York and Miles Kruppa in San Francisco. Please send feedback to due.diligence@ft.com

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