The move is to unwind cross-shareholdings which can lead to lax governance by protecting management from shareholders
Japanese financial groups including Tokio Marine, Sompo and two MS&AD units will sell Honda Motor shares worth US$3.3 billion to unwind cross-shareholdings, a regulatory filing showed on Thursday (Jul 4).
Mitsubishi UFJ and Mizuho, Japan’s first- and third-largest financial groups, also plan to participate in the sale, a sign that the unwinding of cross-shareholdings is catching pace as part of Japan’s corporate governance reforms.
Reuters reported the insurers’ plans earlier this week.
Cross-shareholding, or companies holding shares in each other, has long been seen as a way to reinforce business ties in Japan. But governance experts and foreign investors said it leads to lax governance by protecting management from shareholders.
The secondary share offering from a total of 10 financial institutions would come up to 300 million shares including over-allotment, with the price yet to be decided. Honda’s shares ended at 1,791 yen on Thursday, valuing the offering at about 535 billion yen (S$4.48 billion).
The four non-life insurers, which include MS&AD Insurance subsidiaries Mitsui Sumitomo Insurance and Aioi Nissay Dowa, have previously said they would cut their entire cross-shareholdings to zero in a few years, in response to a price-fixing scandal last year.
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Honda has already announced plans to buy back up to 300 billion yen’s worth of its own shares during the current financial year. It announced no further share buyback on Thursday.
Honda was one of the top five cross-shareholding companies for the insurers, except for Aioi Nissay Dowa Insurance, according to securities filings in March. REUTERS
