The decision by the Yamauchi family's sixth-generation to sell part of their 10% stake in Nintendo does not prevent the family from retaining control of the gaming company, according to a Japanese business academic.
In a statement released this week, Nintendo said it would buyback up to 9.5 million shares – around 114 billion yen (€822 million) - which accounts for 7.4% of the total common shares outstanding.
It revealed part of this would come from the heirs to Hiroshi Yamauchi, the fifth-generation former chief executive who led the company for 53 years, and was an executive director at his death in September last year.
Yamauchi, who had a 10% stake in the business, had four children, but Nintendo has not commented on which of them sold portions of their common stock holdings.
Toru Yoshikawa, an associate professor of strategic management, area coordinator, strategy and organization at the Singapore Management University, said families in Japan often only own a small stake in their family business.
“In other Asian countries it’s usually majority owned, so over 50%, like in Singapore or Taiwan. In Japan it’s usually 2% to 10% owned by the family,” he said.
Yoshikawa said it is common for family business heirs to sell shares back to the company, in order to pay Japan’s high tax, but he said as it is treasury stock, and is not being bought by other investors, the family can maintain control through management and board positions.
Inheritance tax in Japan is 50%, compared to 17% in both Taiwan and Singapore.
“Toyota Motors is a large family business, but the Toyoda family only owns 1%. A family member is CEO right now, and people get told it’s a family company,” Yoshikawa said.
Yamauchi took over Nintendo in 1949, after his grandfather suffered a stroke, and is credited with transforming the family business from a playing card business into one of the biggest names in computer gaming.
His successor, Satoru Iwata, was the first non-family member to lead the business and went on to initially triple Nintendo’s revenue, introducing the popular Wii and Nintendo DS handheld player.
However, since 2007 the company, which last year had revenues of $2 billion (€1.5 billion), has lost more than 80% of its value, due to strong competition from Sony's Playstation, and Microsoft’s Xbox.