Japanese investors block merger

Tokyo Kohtetsu specialises in steel sheets and H-beams

Japanese shareholders have wielded their power for the first time to block a merger that had been approved by the companies' boards.

Investors in the small but profitable steel firm Tokyo Kohtetsu vetoed the share swap with Osaka Steel.

The campaign was led by the investment fund Ichigo Asset Management, which said the share swap ratio was unfair.

It said the ratio only represented a 0.3% premium above Kohtetsu's share price before the deal was announced.

Shareholder activism is very unusual in Japan, because decisions are normally taken on the basis of consensus between management, employees and customers.

"With this vote, Japan's some 40 million shareholders will be encouraged to participate in enhancing corporate value," Scott Callon, chief executive of Ichigo, told a news conference.