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 alleged breaches of foreign ownership rules.
Toyo Construction Co, the marine construction company now 27% owned by Yamauchi-No.10 Family Office (YFO), made the request to the government this month, according to a letter seen by Reuters.
The move by Toyo, which maintains port facilities and constructs seawalls and other key parts of infrastructure, shows how rules over national security can increasingly play a role in takeover battles.
In a statement on Tuesday, Toyo confirmed it had asked Japanese authorities to investigate the family office.
YFO, which manages nearly $1.5 billion of assets for members of Nintendo’s founding Yamauchi family, last year effectively blocked a takeover attempt for Toyo from an industry rival, saying it would offer a higher price.
YFO has amassed most of its 27% stake through three related investment companies registered in the Cayman Islands, each of them with less than 10%.
In its letter, Toyo said its businesses are in strategically important “core sectors” – meaning that any investor is required to report to the government before acquiring a stake of 10% or more.
Because the three Cayman Islands-registered vehicles are related, Toyo believes YFO violated the rules by not notifying the government beforehand, the company said in its letter.
Violation of such requirements could result in fines, imprisonment, along with other penalties including the return of all or partial stakes acquired through such investment, according to the government.
Toyo also took issue 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 written response to Reuters questions, YFO said it “would not give in to pressure based on groundless claims”.
It said the three investment vehicles were not closely related as defined by law in terms of the capital structure and that all three had different directors.
“In both the acquisition of Toyo Construction shares and the formulation of the buyout proposal, we have been in close consultation with regulators throughout. At no time have we received indication of any issue from regulators,” it said.
Toyo announced a new mid-term business plan this month aimed at boosting value and winning support from shareholders. It said it would double its dividend payout ratio and called for a sharp increase in group net profit by March 2028.
It also plans entry into 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.
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