A $39 billion Canadian takeover bid for the owner of 7-Eleven signifies a shift in Japan’s corporate governance, leaving CEOs apprehensive about their own companies’ vulnerabilities, Suntory Holdings’ chief, Takeshi Niinami, said on Wednesday.
In an interview with Reuters Next, Niinami pointed out that Seven & I’s decision to decline the bid from Alimentation Couche-Tard illustrates a trend where firms are no longer outright rejecting foreign offers but are instead assessing their value.
Niinami, 65, a prominent figure in Japan’s business world as the chair of the Keizai Doyukai business lobby and an economic advisor to both current and former prime ministers, remarked, “Seven & I’s response was appropriate. Their refusal of Couche-Tard’s offer last week shows that Japan’s corporate governance is evolving.
However, he noted that the bid has caused Japanese executives to become more cautious, worrying that they might face similar challenges within their own firms.
Niinami explained that governance reforms and Japan’s recovery from deflation are driving companies to place greater emphasis on returns on equity. He also highlighted that the weak yen acts as an “amplifier” for these changes, intensifying the pressure on companies to generate value or face the risk of acquisition.
A Harvard Business School graduate, Niinami previously held the position of CEO at Lawson, a convenience store chain, before becoming the first non-founding family member to head Suntory.
He spearheaded Beam’s $16 billion acquisition in 2014 and spearheaded Suntory’s century-old company’s development into China and India.
In Japan, where outbound deal value in 2024 sits at a 17-year high despite a historically weak yen, overseas acquisitions are still a hot topic.
The agreement that both front-runners in the US presidential race have rejected, Nippon Steel’s plan to acquire U.S. Steel, has perhaps been the most controversial.
Niinami claimed that the resistance was “just a matter of politics” and that Nippon Steel’s proposal would benefit American steel companies and the nation’s economy.
He continued, saying that Japanese businesses still have a “strong appetite” to invest in the US.
Suntory is constantly seeking new brands to add to its collection and has the financial means to make a $10 billion acquisition, yet there aren’t any suitable candidates right now. said Niinami.
He said that benchmark interest rates might increase to 1% from the current 0.25% in six to nine months. Regarding the Japanese economy, he said the central bank has done a “great job” of informing the market of its aim to normalize monetary policy.
The Japanese economy is starting to show signs of life again, but caution is needed to keep the wage growth trend going, according to Niinami.
Wage increases need to be sustainable to foster consumer demand among the general public,” he remarked. “We’ve lost our economic enthusiasm due to two decades of deflation. Now is the moment to take action.