The Recent Japan Supreme Court Decision on ‘Fair Value’ for Cash-out in Public M&A Transactions: A Further Step towards Process-oriented Judicial Review?

I. Introduction
Until recently, Japanese courts exercised relatively broad discretion when deciding ‘fair value’ for cashing out minority shareholders in public M&A transactions. Such trend created a degree of uncertainty and unforseeability for parties in relation to the determination of the cash-out price in going-private transactions.

However, the recent July 2016 Supreme Court decision with respect to the shares of Jupiter Telecommunications Co, Ltd. (the ‘JCOM Decision’) appears to have narrowed the courts’ discretion by determining that in a transaction structured as a tender offer followed by a cash-out where shares subject to a call are utilized,8 provided the tender offer was conducted pursuant to a process generally accepted as being fair, the cash-out price should, in principle, be the same as the tender offer price.

The JCOM Decision is important insofar as it provides the parties in public M&A transactions with a greater degree of certainty and foreseeability in relation to the cash-out price.

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