November 19, 2025 | Industrials | Asia | Active
Japan’s landscape for squeeze-outs and minority shareholder rights in 2025 looks very different from just five years ago. Legal reforms, together with evolving corporate governance norms and more assertive investors, have combined to create a more credible “fair M&A” regime in which minority shareholders are now better protected and have leverage over price and process. A controlling shareholder contemplating a Japanese MBO and a subsequent squeeze-out today is now expected to not only meet, but also strictly adhere to, a clear checklist. They must establish an independent special committee, obtain credible valuation reports, very likely include a majority-of-minority (MoM) condition, and ensure transparent, fair dealing throughout. If they do this, the transaction is more likely to close smoothly, with less risk of legal disruption. If they cut corners, or push through an opportunistically low price, risks are high, where special committees push back, minority shareholders may mobilise, and courts may raise the price above the original offer in appraisal proceedings. Precedents like the FamilyMart buyout (2020) show that substance now matters over form, such that the fair process standard is no longer a box-ticking exercise but a question of outcome: Did minority shareholders get a fair deal? And was a proper process undertaken? In practice, this gives minorities not only a stronger voice but also some form of veto, or, at a minimum, a clear route to recourse through exercising their appraisal rights. For funds looking at playing for Japan M&A shareholder activism, there is a now a recognisable toolkit to influence the outcome, with the added comfort that courts will take fairness seriously if the dispute ends up in appraisal proceedings. Taking the pending Toyota Industries buyout as our case study, and drawing on input from three Tokyo-based M&A lawyers, this report examines how this flagship deal is facing growing shareholder pushback, and how activist pressure fits into the country’s evolving “fair M&A” and appraisal rights regime. We look at where the process aligns with – and falls short of – Ministry of Economy, Trade and Industry (METI) / Tokyo Stock Exchange (TSE) expectations, how fair value and hidden assets underpin arguments for a bump, and what are practical options to engage, seek a bump, and/or litigate. Our valuation work in this 51-page report shows that there is ...
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