Taking listed subsidiaries fully into the group through buyouts (2022)

Companies to list, and companies to fold in

The core of this capital policy is that Hikari Tsushin does not hold its companies uniformly but sorts them by degree. In “net investment” it holds shares of excellent outside companies for the long term at less than a majority stake, and takes its cut of their profit. A subsidiary that can be deeply combined with its sales network and its goods, by contrast, it delists and takes in at 100%, polishing it as part of the group. The move to unwind parent-child listings and take a company fully private belongs to this latter pole. Hikari Tsushin sorts the companies it has gathered, one by one, into those it holds as investments and those it binds together as operations.

Delisting a listed subsidiary is, for minority shareholders, an exit in which their shares are bought out at a premium, and, for Hikari Tsushin, a means of group integration and cost reduction. Because the interests of the two collide over the level of the premium, full acquisition always carries the question of the fairness of the price to minority shareholders. Even so, a corporate group past the stage of adding companies cannot avoid the question of how to re-bind the ones it holds. Hikari Tsushin’s absorption of its listed subsidiaries shows one form of the sorting that an expanded group confronts as it heads into maturity.