Around half of Japanese companies are considering reviewing or restructuring their businesses to increase shareholder value, including acquisitions, a Reuters poll showed.
The survey results are the latest sign that companies in the world’s third-largest economy are looking to take concrete action to overhaul their businesses and increase shareholder value.
The Tokyo market has hit its highest level in three decades on expectations that companies will boost shareholder returns through cross-shareholding liquidations, share buybacks and other measures.
With nearly half of listed companies trading below their book value, the Tokyo Stock Exchange is putting pressure on companies to review their use of capital, releasing a list on Monday of companies that have plans to put pressure on laggards.
While the TSE lists companies that have created or are considering action plans, the Reuters survey shows what actions are being considered.
Of the 104 companies surveyed, nearly a third said they are considering combining their core businesses with other companies through mergers and acquisitions (M&A), while about a quarter are considering selling non-core businesses.
A wholesale respondent said his company wanted to partner with downstream companies to drive restructuring. Another said he wanted to “expand company size through proactive M&A.”
The survey was conducted by Nikkei Research on behalf of Reuters from December 22 to January 12, with companies responding on condition of anonymity to allow them to speak more freely.
“Japan is facing a decade of change. Structural changes driven by new government and TSE mandates will optimize capital allocation,” Jefferies analyst Atul Goyal previously wrote in a note to clients, saying Japan is heading into a “golden age.” “.
Companies surveyed last year said they were feeling more stock market-related stress, with Japan seeing a rise in management buyouts as firms seek to escape shareholder pressure.
Japan wants to increase private household income from investments and is expanding the allowance for tax-free investments through the Nippon Individual Savings Account (NISA) program from January.
Given this expansion, 15% of companies in the latest survey said they are considering or have already increased dividends, while a smaller number are considering buybacks or stock splits.
2024-01-18 02:06:05
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