*

Japanese firms increasingly focused on value, CEOs wary of

foreign takeovers, says Niinami

*

Weak yen amplifies pressure on Japanese companies to

increase

equity returns

*

Niinami supports Nippon Steel's ( NISTF ) U.S. bid, sees politics in

its

opposition

*

Suntory could afford a purchase in the $10 bln range, says

Niinami

(Releads, adds comments on M&A, Japan economy)

By David Dolan and Rocky Swift

TOKYO, Sept 11 (Reuters) - A $39 billion Canadian

takeover bid for 7-Eleven's owner indicates a shift in Japan's

corporate governance and has left CEOs "nervous" that their

companies could be next, the head of drinks giant Suntory

Holdings said on Wednesday.

Seven & i's ( SVNDF ) response in rejecting the bid by

Alimentation Couche-Tard ( ANCTF ) also revealed companies are no

longer simply rebuffing foreign offers outright and are instead

focusing on value, the chief executive of Suntory, Takeshi

Niinami, said in a Reuters NEXT Newsmaker interview.

Niinami, 65, is one of Japan's most influential executives,

serving as chair of the Keizai Doyukai business lobby and also

as an economic adviser to current and former prime ministers.

"I think Seven & i ( SVNDF ) responded fairly," Niinami said. The

company's rejection of Couche-Tard's bid last week "demonstrates

that Japan's corporate governance has been advancing."

But he added the bid has made Japanese executives look over

their shoulders fearing a similar challenge in their own

companies.

Governance reforms and Japan's emergence from deflation are

forcing companies to focus more on returns on equity, he said,

adding the weak yen has been an "amplifier" for change as it

puts more pressure on companies to create value or risk being

acquired.

A graduate of Harvard Business School, Niinami was chief

executive of convenience store operator Lawson before becoming

the first non-founding family member to head Suntory.

In 2014, he led a $16 billion takeover of U.S. spirits maker

Beam and has driven expansions of century-old Suntory into India

and China.

SUNTORY PRIMED FOR M&A

Overseas acquisitions remain a hot topic in Japan, where

outbound deal value in 2024 stands at a 17-year high, despite a

historically weak yen. Perhaps the most contentious has been

Nippon Steel's ( NISTF ) offer to buy U.S. Steel, a deal

that has been opposed by both leading candidates in the U.S.

presidential election.

Niinami said Nippon Steel's ( NISTF ) bid would be good for U.S. Steel

and the American economy, and that the opposition was "a matter

of politics".

Japanese companies still have a "strong appetite" to invest

in the U.S., he added. Suntory is always looking to pick up

brands to add to its portfolio and could afford a purchase in

the $10 billion range, though there are no immediate candidates,

Niinami said.

As for the Japanese economy, the central bank has done a

"great job" in communicating to the market its intention to

normalise monetary policy, he said, adding that benchmark

interest rates could rise further to 1% from the current 0.25%

in six to nine months.

Dynamism is returning to the Japanese economy but care must

be taken to maintain momentum in wage growth, Niinami said.

"Wage increases should be sustainable to create the appetite

of consumption of the general public," he said. "We lost the

animal spirits because of two decades of deflation. Now is the

time to act."

(Reporting by David Dolan and Rocky Swift; Editing by

Muralikumar Anantharaman)