Sony-Aiwa

27 July 1973, 715 Hanrei Jiho 100 (1973)

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Sony-Aiwa

Tokyo District Court
27 July 1973, 715 Hanrei Jiho 100 (1973)

Facts

Aiwa, Co., Ltd. (Aiwa) (defendant), an audio-electronics manufacturer, was in financial distress and unable to pay dividends to its shareholders, resulting in a share price of 50 Japanese yen (JPY). Rumors abounded that Aiwa would be acquired by another company, resulting in speculative Aiwa stock purchases and a nearly threefold increase in the share price (145 JPY) even though more profitable comparable companies were experiencing stock-value drops. Aiwa did seek a business combination with a large company and entered a deal with Sony Corporation (Sony) in which Sony would acquire 12 million shares of Aiwa for 70 JPY per share. Further stock speculation caused the Aiwa stock price to increase even higher. An Aiwa shareholder (plaintiff) brought a derivative action against Aiwa, claiming that the 70 JPY price was unfair given the Aiwa stock’s 145 JPY share price before the announcement of the Sony deal. Therefore, the Aiwa shareholder argued that the shareholder was improperly deprived of preemptive rights. The Tokyo District Court dismissed the claim, and the Aiwa shareholder appealed.

Rule of Law

Issue

Holding and Reasoning (Per curiam)

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