A lobby
group of European businesses in Japan on Thursday urged Japan to avoid further
delay in the introduction of a takeover technique widely referred to as a
''triangular merger.''
The European
Business Community, the trade policy arm of the 18 European national chambers of
commerce, said it made the request at a meeting of the Corporate Governance
Committee of the Liberal Democratic Party, at which EBC Chairman Richard
Collasse expressed the EBC positions.
In a press
statement released the same day, Collasse called for making it easier for
European companies to implement mergers and acquisitions transactions with
Japanese firms on the basis of triangular mergers.
''We want it
to be easier to merge with Japanese companies on a friendly basis,'' he said,
adding, ''The triangular merger scheme is a good first step to make this
possible.''
European
businesses ''were therefore perplexed and disappointed when the introduction of
this scheme was delayed with no other reason given than a general fear for
hostile takeover,'' he said.
On May 18,
the Cabinet of Prime Minister Junichiro Koizumi decided to put off authorizing
the scheme's introduction by one year.
Under the
scheme, a Japanese subsidiary of a foreign corporation could take over a target
Japanese firm by swapping some of the parent's stock for all or a sizable
portion of the target's shares without using any cash to fund the acquisition.
Japan
decided to defer authorizing the scheme out of fear that it would make many
Japanese companies easy takeover targets for foreign companies.
But
Collasse, concurrently president of Chanel K.K., called on Japan to avoid
further delay in the scheme's introduction and swiftly decide on ''tax
deferrals'' to be applied for this scheme after the one-year postponement period
expires.
In making
the request, the EBC joined the American Chamber of Commerce in Japan,
which has been asking Japan to temporarily refrain from collecting a capital
gains tax on any profit to be posted by target Japanese firms accepting such
stock-based payments, because the acquired firm would pay the tax by selling a
sizable part of shares in its foreign acquirer.
Critics of
the acquisition scheme have noted that refusing the requests to defer the
capital gains tax would be the best defense method because foreign acquirers
would fear that massive stock sales by the acquired would cause a dive in the
acquirer's own stock prices.
Established in 1972, the EBC currently represents more than 3,000 European companies.
###