Nintendo’s partners are selling $2 billion in shares — here’s what that actually means

Nintendo announced Friday that several of its long-time partners, including DeNA, will sell off some ¥300 billion in company shares. However, this isn’t some money-raising initiative or cause for concern, more so an action that’s part of a broader shake-up of Japan’s corporate shareholding practices.

This sizeable change, as reported by Miho Uranaka for Reuters, will see several large scale shareholders sell off their (roughly $2 billion USD) stakes in the Kyoto-based company — including Japan’s biggest bank MUFG, the Bank of Kyoto, and Resona Bank. It’s pretty dry stuff, but my understanding is that this change to offload holdings is part of a bigger push from regulators and the Tokyo Stock Exchange, designed to stop big companies and banks from holding significant volumes of shares in one another.

Large cross-shareholdings of this type (for example, the Bank of Kyoto holds over 4% of Nintendo stock) are said to be seen as less of a traditional investment, and more of a corporate handshake of sorts — and the thinking now seems to be that such arrangements are just a bit too cozy. Toyota has announced a similar $19 billion dollar unwinding.

In addition to this bit of corporate housekeeping, Nintendo also announced they will be buying back some 14 million shares — spending around ¥100 billion to do so. This buyback will no doubt help cushion the stock from any shock once all the additional shares being sold from their partners hit the market. With Nintendo selling Switch 2 units at a record pace, it’s as good a time as any to make such moves.

Following news of the sell-off Nintendo shares are up nearly 3%.