Exclusive-Half of Japan firms look at restructuring to boost performance

TOKYO (Reuters) – Around half of Japanese firms are looking at reviewing or restructuring their businesses to boost corporate value, including acquisitions, a Reuters survey showed, amid a push for companies to improve governance.

The survey results are the latest sign of concrete actions companies in the world’s third-largest economy are looking to take to overhaul their businesses and boost corporate value.

The Tokyo market has hit its highest in three decades on expectations companies will boost shareholder returns through unwinding of crossholdings, share buybacks and other measures.

With nearly half of listed companies trading below book value, the Tokyo Stock Exchange is putting pressure on firms to review their use of capital, on Monday publishing a list of those with plans to put pressure on laggards.

While the TSE lists companies that have compiled or considering action plans, the Reuters survey shows measures being considered.

Among 104 companies polled, just under a third said they were looking at combining their core businesses with other companies through mergers and acquisitions (M&A), with around a quarter looking at the sale of non-core businesses.

One respondent from the wholesale sector said its company was looking at combining with downstream players to drive restructuring. Another said it was looking “to expand corporate scale through proactive M&A”.

The survey was conducted for Reuters by Nikkei Research from Dec. 22 through Jan. 12, with companies responding on condition of anonymity to allow them to speak more freely.

“Japan is entering a transformational decade. Structural change driven by new mandates from the government and TSE will optimise capital allocation,” Jefferies analyst Atul Goyal previously wrote in a client note, saying Japan is poised to enter a “golden age”.

Companies polled last year said they felt more listing-related burdens, with Japan seeing an uptick in management buyouts as firms move to escape shareholder pressure.

Japan aims to increase household income from investments, from January expanding the allowance for tax-free investments through the Nippon Individual Savings Account (NISA) programme.

In light of the expansion, 15% of firms in the latest survey said they were considering or had already increased dividends, with a smaller number saying they were looking at buybacks or stock splits.

(Reporting by Sam Nussey; Additional reporting by Anton Bridge; Editing by Christopher Cushing)