Japan Halts MBK’s Makino Milling Buyout Bid on Security Concerns

Reuters

17:21 JST, April 23, 2026

TOKYO (Reuters) – The Japanese government has asked Asian private equity fund MBK Partners to halt its acquisition of machine-tools maker Makino Milling Machine, citing national security concerns, in only the second such case to date.

After examining the impact on the production base and the possibility of sensitive technology leaking, the industry ministry “determined that the investment poses a risk of undermining national security,” Finance Minister Satsuki Katayama told the Diet on Thursday.

“We took into account the fact that … Makino is one of the world’s leading manufacturers of machine tools and that its products are widely used by manufacturers of Japan’s defense equipment,” she said.

Makino’s shares were down 9.4% in afternoon trade in Tokyo.

MBK announced its plan in June last year to acquire Makino through a 275 billion yen ($1.72 billion) tender offer, but prolonged domestic and overseas regulatory reviews had pushed back the expected launch of the tender offer to late June.

The fund said in a statement on Thursday it had presented measures to dispel national security concerns and was surprised by the government’s recommendation.

Makino said it was gathering information and that nothing had been decided.

Prime Minister Sanae Takaichi’s government this week unveiled its biggest overhaul of defense export rules in decades, opening the way for exports of warships, missiles and other weapons.

The shift on arms exports affected the Makino decision as defense-related manufacturers become more important to industrial strategy, said a person involved in the discussions.

A government official said the rejection of the Makino deal “is not meant to send a message that Japan is shutting down foreign investments.” Katayama told reporters: “The view that sound investment is important for the development of Japan’s economy has not changed.”

Makino’s tools, which are used to manufacture high-end components such as aluminum airframes, require permission from the trade ministry for export due to the potential for military use.

“Once advanced technologies flow overseas, they cannot be recovered, and from a national security standpoint it is understandable that the government chose not to allow the acquisition,” said Arata Kuno, professor of international economics at Asia University in Tokyo.

“It represents an exceptional measure confined to a highly strategic sector and is unlikely to be applied indiscriminately,” he said.

MBK, a North Asia-focused buyout firm with offices in Seoul and other cities in the region, was founded by American-Korean dealmaker Michael Kim. South Korean prosecutors in January sought a warrant to arrest Kim on fraud and other charges over the sale of supermarket chain Homeplus, but a Seoul court rejected the request, saying material the prosecutors had submitted was insufficient to justify the charges.

Before the Makino decision, Japan had rejected only one deal under the Foreign Exchange and Foreign Trade Act: the attempted acquisition in 2008 of Electric Power Development 9513.T by the London-based Children’s Investment Fund.

“This event sets a precedent and will increase the risk premium for foreign takeovers of Japanese companies in core business sectors,” wrote Arun George, an analyst who publishes on Smartkarma. “FEFTA approval can no longer be considered low-risk.”

Japan’s opposition to the Makino purchase contrasts with its clearance last year, after a lengthy review, of Taiwanese firm Yageo’s unsolicited bid for Shibaura Electronics.

“Japan is seeking to amend the FEFTA, including a CFIUS-type board to deal with these situations more proactively,” said Travis Lundy, an analyst who publishes on Smartkarma, referring to the Committee on Foreign Investment in the U.S.

“Perhaps they will find more bids to reject, but so far, one event does not a trend make,” he said.