How it's supposed to work... A step forward for Japanese Mergers

A little mini-saga in Japan shows that M&A are inching in the right direction. Last month, Hoya, a $14 billion market cap maker of optical glass for digital cameras made a bid for Pentax, a less than $1 billion dollar maker of digital camera lenses. The Pentax CEO accepted the bid and was chucked out for his 'betrayal'. In the good old days, that would have been the end of it but the times they are a-changing. An activist fund - a JAPANESE activist fund - Sparx - owned 24% of Pentax while Fidelity owned 12.6%. The shareholders allowed Pentax to present their vision of the company going solo - and when (of course) it was dismal - forced the company to accept the merger. The message is that billion dollar companies in crowded highly competitive global industries aren't going to survive no matter how unpleasant this fact is to old-line Japanese management.