Japan blocks South Korean MBK's $1.7bn Makino takeover
Source · M&A desk
— Summary
Japan has moved to block South Korean private equity group MBK Partners' ¥274bn ($1.7bn) takeover of machine tools maker Makino Milling on national security grounds — the first such intervention since Tokyo revamped its foreign-investment screening rules in 2020, and the first outright block since the UK-hedge-fund / J-Power episode in 2008. Makino shares fell as much as 10% on Thursday; the Nikkei 225 was down 1%.
The Japanese government told MBK its ownership was "incompatible" with Makino's sensitive-information obligations because the company's machine tools — so-called "mother machines" that produce high-precision aircraft engine blades and vanes — are "widely used by manufacturers of defence equipment in Japan". MBK has until 1 May to withdraw voluntarily, after which Tokyo can impose stricter measures. Prime minister Sanae Takaichi, elected in a February landslide, is overhauling Japan's FDI regime on the model of the US Committee on Foreign Investment (CFIUS) and tightening defence and critical-minerals policy in parallel.
The decision could chill foreign private equity in Japan, where MBK — founded in 2005 by ex-Carlyle executive Michael Byung Ju Kim, now with $33bn of assets under management — has been one of the most active buyers. MBK had been negotiating with Tokyo for ten months after winning the bid; it stepped in after Nidec dropped out following Makino's poison-pill defence. US-based Carlyle and several Japanese bidders are reportedly circling. Source: Financial Times, 23 April 2026, Harry Dempsey, David Keohane and Daniel Tudor.
The story in one line. Tokyo formally intervenes to stop a foreign buyout of a defence-adjacent machine-tool maker — the first hard block of an FDI deal in Japan in 18 years.
Key numbers
¥274bn ($1.7bn) announced MBK bid for Makino Milling
–10% intraday drop in Makino shares on Thursday; Nikkei 225 –1%
1 May — deadline for MBK to withdraw voluntarily
2020 — last major overhaul of Japan’s FDI screening rules
10 months — MBK’s post-deal dialogue with the government
$33bn — MBK’s assets under management (founded 2005)
February 2026 — Sanae Takaichi’s landslide election
Why it matters
Machine tools that make aircraft engine components are dual-use: the same tools produce commercial jets and military hardware. Tokyo is signalling that any foreign ownership of such a supplier is a national security issue, not just a commercial transaction. Takaichi wants a “Japanese CFIUS” (a tougher, US-style interagency screening), and this case sets the precedent. For private equity, the chill is real: a 10-month negotiation ending in a block, in one of the world’s most active PE markets, reprices the transaction risk on every Japanese industrial target with even tangential defence exposure.
Takeaway
Japan is drawing a line on foreign ownership of dual-use industrials, and the timing — during an active Iran war and a Takaichi rearmament push — amplifies the signal. Expect more Carlyle-style domestic-partnered consortiums and fewer pure-play Asian PE bids on Japanese industrial targets.
Source: Financial Times, 23 April 2026, Harry Dempsey, David Keohane and Daniel Tudor.