Nintendo Shares in Focus as Kyoto Stakeholders Sell

Key Moments

Strategic Stakes in Nintendo Set to Be Cut

By Miho Uranaka and Sam Nussey

TOKYO, Feb 27 (Reuters) – Nintendo is preparing for a significant reshaping of its shareholder base, with several long-standing corporate investors planning to reduce or exit their positions, according to three people with knowledge of the matter.

The move centers on the unwinding of strategic shareholdings in the “Super Mario” creator, with entities including MUFG Bank and the Bank of Kyoto expected to sell portions of their stakes, the sources said.

Two of the people familiar with the matter said the total size of the planned offering is forecast to be roughly 300 billion yen ($1.9 billion). They added that Nintendo could reach a formal decision as early as Friday and that the company intends to conduct a share buyback in conjunction with the sell-down.

Reuters is reporting Nintendo’s plan for the first time.

Nintendo did not respond to a request for comment. The sources requested anonymity because the details have not been made public.

Market Reaction and Existing Stakes

News of the prospective transaction affected trading in related stocks. Nintendo shares, which had been rising, trimmed earlier gains but remained up 2.4%.

Kyoto Financial’s shares jumped 9%.

The Bank of Kyoto, a regional lender, held a 4.19% stake in Nintendo as of September last year. MUFG Bank, Japan’s largest bank, owned a 3.62% stake, which is held through a trust bank structure.

Mitsubishi UFJ Financial Group declined to comment, and Kyoto Financial Group did not respond to an inquiry seeking comment.

Cross-Shareholdings Under Pressure

Both MUFG Bank and the Bank of Kyoto have articulated policies aimed at trimming cross-shareholdings. A prior reduction in Nintendo holdings in 2019, involving these banks and other participants, amounted to about 71 billion yen.

Regulators and the Tokyo Stock Exchange have been urging Japanese corporations to unwind cross-shareholdings, a long-standing feature of the country’s corporate landscape.

The practice involves companies taking equity stakes in one another to reinforce business relationships. Governance specialists and international investors have criticized such arrangements for potentially shielding management from shareholder discipline. While cross-shareholdings have been prevalent in Japan for decades, they are less common in Western markets.

Context of Wider Strategic Stake Sales

The planned Nintendo-related sales follow a similar trend among other major Japanese issuers. Toyota is planning an unwinding of strategic shareholdings that would involve banks and insurers selling around $19 billion of its shares, Reuters reported on Thursday.

Key Shareholding and Transaction Figures