This photo shows people visiting a store of the game giant Nintendo in Tokyo on February 5, 2023. PHOTO AFP TOKYO - The Japanese construction company targeted for takeover by the family office linked to Nintendo Co's founder is pushing back against the fund and has asked the government to investigate breaches of foreign ownership rules.
Toyo Construction Co, a marine construction company, is now 27 percent owned by Yamauchi-No. According to a letter from the 10 Family Office, the request was made to the government this month.
The move by Toyo, which maintains port facilities and builds seawalls, shows how rules over national security can increasingly play a role in takeover battles.
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Toyo asked Japanese authorities to investigate the family office in a statement on Tuesday.
YFO, which manages nearly 1.5 billion of assets for members of the Nintendo's founding Yamauchi family, blocked a takeover attempt by Toyo from an industry rival, saying it would offer a higher price.
YFO has accumulated a 27 percent stake through three related investment companies registered in the Cayman Islands, each with less than 10 percent.
In its letter, Toyo said that its businesses are in strategically important core sectors - meaning that any investor must report to the government before acquiring a stake of 10 percent or more.
Because the three Cayman Islands-registered vehicles are related, Toyo believes that YFO has breached the rules by not notifying the government beforehand, the company said in its letter.
The government says that a violation of these requirements could result in fines, imprisonment, and other penalties, including the return of all or partial stakes acquired through the investment.
Toyo was unhappy with the way the three vehicles disclosed their investment purpose. They initially stated in regulatory filings that the purpose was pure investment, but later included the possibility of making important proposals, Toyo said in the letter.
In a response to Reuters questions, YFO said they would not give in to pressure based on groundless claims. It said that the three investment vehicles were not closely related as defined by law in terms of capital structure and that all three had different directors.
We have been in close consultation with regulators throughout the process, including the acquisition of Toyo Construction shares and the formulation of the buyout proposal. It said there was no indication of any issue from regulators at the time.
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Toyo announced a new business plan this month aimed at boosting value and getting support from shareholders. It said it would double its dividend payout ratio and that there would be a big increase in net profit by March 2028.
It plans to enter an offshore wind power business and aggressive expansion of its overseas construction businesses.
YFO was launched in 2020 by Banjo Yamauchi, the 30-year-old biological grandson and adopted son of Nintendo's third president Hiroshi Yamauchi, who transformed the maker of playing cards into a video game giant known for characters such as Mario and Princess Zelda.