The Tokyo District Court’s decision Friday to stop Fuji Television Network Inc. from issuing share warrants as a method to take control of Nippon Broadcasting System Inc. is being seen as propelling Japan’s capital market into the future.

Experts say the closely watched decision is in line with Japan’s goal of easing regulations in the financial sector to gain a competitive edge in the global market, easing worries that foreign investors otherwise might have shied away from making further investments in the country.

The district court ruled against Nippon Broadcasting’s plan to offer exclusive rights to Fuji TV to purchase a huge number of new shares, saying, “It is aimed at maintaining the controlling rights of managers belonging to the Fujisankei media group.”

Nobumichi Hattori, an expert on merger and acquisition deals, said that if the court had ruled in favor of NBS, foreign investors might have thought that “anything goes” in the Japanese stock market when dealing with “unwanted” mergers and acquisitions.

“M&A activity in Japan could have died if Livedoor’s request was rejected,” said Hattori, a guest associate professor at Hitotsubashi University.

The decision against the radio broadcaster’s defensive maneuver is also likely to lessen foreign investors’ fears that Japan’s new regulations governing M&As will be overly tightened, Hattori said.

“If foreign investors slow down the current pace of buying Japanese equities, it would have an incalculable negative impact on the future of the stock market,” said Hiroyuki Nakai, director and chief strategist at Tokai Tokyo Research Center Co.

Nakai and many other analysts at both domestic and foreign brokerages know the market would face a bleak future without help from foreign investors.

Foreign investors’ trading currently accounts for nearly 50 percent of the country’s total securities transactions.

Their active buying is believed to be driven by growing expectations for the start of an era of large-scale M&A deals involving Japanese firms.

If Friday’s court ruling was interpreted by investors as going against open-market rules, it could have dealt a blow to the current bullish market, analysts said.

At the heart of Livedoor’s injunction request was the issue of whether Nippon Broadcasting’s decision on Feb. 23 to issue stock warrants to Fuji TV only was a legitimate way to defend itself from a takeover.

The fast-growing Internet firm claimed the planned issuance would have diluted the share price and undermined the interests of existing stockholders.

Some have said Livedoor does deserve criticism for taking advantage of a legal loophole to acquire a huge chunk of NBS shares in premarket trading Feb. 8, but the court role was only to address the legality of Nippon Broadcasting’s share-warrant plan.

Most analysts say Nippon Broadcasting’s “poison-pill” strategy was controversial because it came as a reactive measure, not a preventative one, to fend off the threat of a hostile takeover.

“If the court rules the poison pill as legal, we believe this could set a dangerous precedent for corporate governance in the future,” said Kathy Matsui, chief Japan equity strategist at Goldman Sachs Group Inc., immediately after the request for injunction was filed.

Livedoor-Fuji TV battle for NBS control

Key events in the battle between Fuji Television Network Inc. and Livedoor Co. for control of Nippon Broadcasting System Inc.:

Jan. 17 — Fuji TV announces a tender offer to acquire more than 50 percent of Nippon Broadcasting.

Feb. 8 — Livedoor boosts its stake in NBS to 35 percent in terms of outstanding shares by acquiring a 29.6 percent portion in off-hours trading on the Tokyo Stock Exchange.

Feb. 9 — Fuji TV rejects Livedoor’s proposal to discuss business alliances and says it will counter the Internet service provider’s major stake acquisition.

Feb. 10 — Fuji TV cuts its equity stake acquisition goal in a tender offer for NBS to 25 percent from the initially targeted stake of more than 50 percent.

Feb. 23 — NBS announces plans to issue Fuji TV warrants for 47.2 million new shares to ward off Livedoor’s takeover bid.

Feb. 24 — Livedoor takes asks the Tokyo District Court for an injunction barring the radio network from issuing the share warrants to Fuji TV.

Feb. 24 — Fuji TV extends the deadline of its tender offer for Nippon Broadcasting by five days to March 7.

March 8 — Fuji TV says it has secured a 39.26 percent stake in NBS in terms of voting rights through the public tender offer.

March 9 — Livedoor’s report to the Finance Ministry shows the company increased its NBS stake to 45.5 percent in terms of voting rights as of March 7.

March 11 — The Tokyo District Court issues an injunction to bar Nippon Broadcasting from issuing Fuji TV the share warrants. NBS immediately files an objection with the same court against the order.

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