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Case Details:
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World Co. Ltd, Japan: Why Go Private?  
 
Product Ref: 07/362C Company: World Co. Ltd

Product Type: Case Industry: Consumer Goods

Related Product(s): Teaching Note
Authors: Mitsuru Misawa   
Early 2005 saw the first hostile takeover in Japan. Financed by foreign capital, the takeover startled Japan's traditional business establishments who now feared that the threat of hostile takeovers had finally become a reality in Japan. Meanwhile, Japan also went through numerous accounting scandals involving public companies and was seeing dramatic changes in disclosure and corporate-governance rules and regulations in regards to issuers of publicly traded securities and their officers and directors.

Concurrently, Mr Hidezo Terai, president of World Co. Ltd, Japan ("World"), a publicly traded apparel company on the Tokyo and Osaka Stock Exchanges, considered returning the company to its private limited status and de-listing it from both the stock exchanges. The company believed doing so would allow them to introduce a management system for quick and flexible responses in the ever-changing fashion business. The market on the other hand suspected that such a move was driven by a need to seek relief from the new disclosure and corporate-governance rules and regulations, and to protect World from possible hostile takeovers.
Functional Area : Finance & Investments

Issues: The case gives students an opportunity to identify: the major reasons why a company goes private; the factors that managers should consider in deciding to go private; other defensive tactics that can be used if going private is mainly intended to block hostile takeovers; the pros and cons of going private and staying public. Moreover, students will also learn about the critical thinking that top management must possess to make decisions on important international business matters as well as the types of pressures imposed by various stakeholders—board of directors, shareholders and banks.
Length: Text: 7 pages
Exhibits: 12 pages
Country: Japan

Pub. Year: 2008 Level of Difficulty: 2
         
This product type is available in the following language(s):      English
         
Related Information: N/A
 
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