In 2007, HOYA of Japan must decide whether to change its friendly exchange offer for Pentax into a hostile cash tender offer. A surprising sequence of events had caused a friendly merger agreement to fall apart, resulting in a boardroom coup at Pentax and the intervention of the Sparx Group, an indigenous activist Japanese hedge fund. The case raises issues about corporate valuation, corporate governance, shareholder activism, takeover deal tactics, and the Japanese market for corporate control.Learning Objective:To build understanding of how deal structure, ownership interests, and valuation can influence M&A transactions. To contrast the governance and management of modern versus traditional Japanese corporations, the rising importance of activist investors in Japan, and the evolution of the Japanese market for corporate control