Livedoor Co. President Takafumi Horie said Thursday he welcomes the capital market regulations set to be introduced in the wake of his firm’s controversial bid to acquire Nippon Broadcasting System Inc.
“I believe mergers and acquisitions will increase because everyone will be able to play fair” thanks to such regulations, he told a packed crowd at the Foreign Correspondents’ Club of Japan. “It is a good thing that the necessary regulations will be put in place. There have been too many loopholes.”
An advisory panel to the Financial Services Agency approved a government proposal the same day to ban the use of off-hours trading to acquire stakes of one-third or more in another company. A bill on the matter will be submitted to the Diet.
Off-hours trading was the way Livedoor used to quietly and swiftly acquire a major stake in the radio station, which is Fuji TV’s biggest stakeholder.
Under the Securities and Exchange Law, a tender offer bid must be made if a buyer intends to acquire a stake of one-third or more in a company. This is done to give shareholders enough time and information to consider the deal.
Livedoor’s transaction took advantage of a loophole left in place by regulators, and was legal.
Horie lauded the new rules, saying capitalism is a two-way street.
“Under the existing rule, the reverse could have also happened,” he said. “That is, Fuji TV acquires a stake (in NBS) during off-hours trading while we are acquiring its stake through a tender offer.”
Horie said he didn’t think a “friendly approach” would have worked with Fuji TV, and decided he needed to take the initiative to get serious attention from old guard media firms before the business opportunity disappeared.
“We’ve been working with broadcasters for the past five years, but they have been too slow to adopt the Internet to their business models,” he said. “Although we prefer to take the friendly approach, we don’t have time for that, and that’s why we had to take forceful steps.”
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