Family Mart TOB price deemed too low by high court; impact on price setting to be private

On November 1, in a lawsuit over the price of the takeover bid (TOB) made by ITOCHU Corporation when it made FamilyMart (Minato-ku, Tokyo) a wholly owned subsidiary, the High Tokyo court that it was clear by the 1st. that the price was in fact fair It was decided to uphold the decision of the Tokyo District Court that the purchase price was 300 yen higher than the purchase price, and to reject FamilyMart’s claim. The photo was taken in March 2015 in Tokyo (2024 Reuters / Toru Hanai)

In 2020, Itochu made a TOB for FamilyMart, which owned 50.1% of, at 2,300 yen per share, but foreign investors who were forced to buy shares without applying for the TOB, etc. The company filed a petition with the Tokyo District Court to determine a fair price, arguing that the price was too low. Last year, the Tokyo District Court found that a special committee established by FamilyMart had not worked properly, and set 2,600 yen as a fair price. Dissatisfied with this decision, FamilyMart appealed to the Tokyo High Court.

The Supreme Court generally upheld the district court’s decision, according to a decision seen by Reuters. The opinion of the special committee that the price level was not appropriate was not respected, and it could not be admitted that the TOB was made using a procedure that was generally recognized as fair. TOB’s price was below the minimum corporate value calculated by a financial advisor appointed by the FamilyMart special committee.

FamilyMart responded, “We are truly disappointed that the fairness of the process we requested was not recognized, and we plan to file an appeal.” We will continue to prepare for future responses.”

Itochu said, “Since this is a pending matter at FamilyMart, we will refrain from commenting.”

In a TOB, which is done when the management acquires shares and lists them, or when a parent company makes a subsidiary listed as a wholly owned subsidiary, there are two parties: management and the parent company who want to get shares as cheaply as possible, and minority shareholders who want to sell their shares at a high price There is a structural conflict between interests There is a number that an increasing number of cases where courts are asked to determine fair purchase prices, such as several investors appealing for a price determination in relation to an MBO led by Taisho Pharmaceutical Holdings.

However, since 2016, the court has not determined the fair price in terms of TOB. The reason for this was the decision of the High Court in the same year regarding Jupiter Telecom TOB. Measures were taken to prevent arbitrary decisions, such as the establishment of a special committee, and the TOB price would be respected as long as the procedures were fair, so shareholders who were dissatisfied with his ‘ price first, they had to prove that the process was unfair, and they were turned away before the price could be checked.

On the other hand, some are concerned that if the review of procedural fairness remains a formality, such as the establishment of a special committee, there will be almost no place to examine price fairness. The decision of the district court, which went into the price of TOB FamilyMart, has been attracting attention because it will affect legal decisions in the future.

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