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Scott Callon, Ichigo, Tokyo Kotetsu and the Shareholder’s Revolt of 2007

February 23, 2007
By Ken Worsley


How will Scott Callon go down in history? The CEO of Ichigo Asset Management in Tokyo led Japan’s first successful shareholder revolt yesterday, by forcing a vote blocking the takeover of Tokyo Kotetsu by Osaka Steel, a subsidiary of Nippon Steel, after arguing that it offered no incentive to investors. Mr Callon, who is also the author of 1995’s “Divided Sun: MITI and the Breakdown of Japanese High-Tech Industrial Power,” used his firm’s position as a 12.6 percent owner of Tokyo Kotetsu to argue that the takeover, which had been approved by the board of directors of both firms, involved an unfair share swap ratio.

This sounds esoteric, but it is a landmark. It has been reported that Callon’s actions led to the first time ever for shareholders in Japan to reject a merger plan already approved by the board of directors of both companies. Following the vote, Mr Callon said, “This is shareholder democracy in action. Shareholders were left out of the room originally.”

Very true. There’s no doubt that this was bound to happen at some time, and Mr Callon happened to not only be in the right place at the right time, but had the fortitude to see the vote through to the end while having a goal in mind: he is not attempting to simply block the takeover. He does want to see the transaction happen, but at terms that are fair for shareholders.

So, what effect will this have on future decisions by boards of directors and their relationship with shareholders? For one thing, management will have to consider whether or not such a revolt could happen. Does this depend on whether or not a significant number of shareholders happen to be foreigners, foreign funds or funds managed by foreigners? This observer thinks that will be significant for now, as we go through a transition period and the native-born shareholders get used to being a voice to be reckoned with.

Hopefully that won’t take long.

Filed Under Business, M&A 

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Comments

3 Responses to “Scott Callon, Ichigo, Tokyo Kotetsu and the Shareholder’s Revolt of 2007”

  1. Trans-Pacific Radio on February 28th, 2007 1:20 am

    TPR News: Tuesday, February 27, 2007 - Abe, abductions, education, DoCoMo and a shareholder revolt…

    Write the name Scott Callon in your Japanese history book. That way, you’ll know the correct answer when someone asks you, “Who led Japan’s first successful shareholder revolt?” On Thursday, Mr Callon, the CEO of Ichigo Asset Management in Tokyo, l…

  2. Slight negative feelings to foreigners buying Japanese companies noted » 世論 What Japan Thinks on March 28th, 2007 11:42 pm

    […] This topic has, I think, been in the news recently, but I can’t find anything about it. The nearest bit of English news I’ve discovered is this piece from Japan Economy News on a foreign-led shareholder revolt. […]

  3. Steel Partners Loses an Appeal; Bull-Dog Loses About $15 Million : Japan Economy News & Blog on December 2nd, 2007 11:01 pm

    […] Thus, the shareholder vote stands. Perhaps this could be a show of shareholder power? We would love to know what Scott Callon of Ichigo Asset Management would have to say on this. […]

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