Nihon Falcom's stock price has soared since the news of the death of Chairman Masayuki Kato, but this is due to the shareholder structure and management policy
#日本ファルコム株主総会
Nihon Falcom's largest shareholder is Nihon Falcom HD, which is thought to be a company run by Nihon Falcom HD representative Kato to hold Nihon Falcom shares; when combined with the shares held in his own name, his ownership ratio exceeds 50%.
In addition, Nihon Falcom is committed to debt-free management with ample internal reserves to avoid cash flow problems in the game business, where development costs are difficult to forecast and sales fluctuate greatly. As of the end of September 2024, the company's cash and deposits were 9.54 billion yen, equivalent to about four years' worth of sales.
In today's stock market, if a company has a lot of cash on hand, shareholders will get angry and say, "You're not running your business efficiently!" But because Mr. Kato holds the majority of the stocks, he has been able to ignore such complaints until now. However, the situation will change with the death of Mr. Kato.
When a major shareholder dies, inheritance occurs. In this case, the surviving family members may have no choice but to sell their shares in order to pay huge inheritance taxes. This reduces the ratio of stable shareholders (there is also debate as to whether the surviving family members are stable shareholders). In this case, there is a possibility that the company will have no choice but to aim for efficient management, like a typical listed company.
And what's important to note is that just before Kato passed away, Nihon Falcom's market capitalization was around 10 billion yen, so if you bought Nihon Falcom for that amount, "not counting the business, you would get 9.54 billion yen in cash," and so people were buying it with the idea that "there's a possibility that some company might do M&A."
Regarding the payment of inheritance tax, in other companies, the company may pay the money as a merit bonus to the founder or buy back the company's own shares, but I think many shareholders are wondering what they will do. When shares are released onto the market, it generally causes the stock price to fall, but in Nihon Falcom's case, the structure of a majority of stable shareholders has collapsed, so it is unusual in that it actually causes the stock price to rise.
A similar pattern can be seen in the case of Ootoya, where a family dispute ensued after the sudden death of the founder, so I hope there won't be any more trouble (although Ootoya does seem to have taken the opportunity of the family dispute to transform into a more modern management style).