Orbis Responds to Public Statements by Tsuruha on Proposed Tsuruha-Welcia Merger and Subsequent Tender Offer by AEON
LONDON--(BUSINESS WIRE)--Orbis Investments ('Orbis'), which held 9.7% of Tsuruha Holdings Inc. ('Tsuruha') as of 28 February 2025 on behalf of its clients, notes the recent public statements by Tsuruha regarding its proposed merger with Welcia Holdings Co., Ltd. ('Welcia'), a company controlled by AEON Co., Ltd. ('AEON'), and the subsequent partial tender offer by AEON to take control of Tsuruha.
Tsuruha Should Receive a Control Premium from Welcia
In a press release dated 14 May 2025, Tsuruha stated that the share exchange ratio '…is considered favourable for [Tsuruha] shareholders when compared to the average premium levels observed in recent cases of full ownership acquisitions through share exchanges with similar characteristics.'
This statement is, in Orbis' view, deeply misguided. Orbis fundamentally disagrees with the assertion that Tsuruha should pay a control premium for Welcia. Although the proposed merger is structured with Tsuruha as the surviving entity, it is an essential component of a series of transactions which would allow AEON to take control of Tsuruha. As such, shareholders in Tsuruha should receive—not pay—a control premium.
Both ISS and Glass Lewis have noted that AEON is taking control of Tsuruha without paying such a premium to Tsuruha shareholders. Both recognise that it is AEON-controlled Welcia—not Tsuruha—that should be paying a premium in this transaction. The fact that Tsuruha is instead paying one makes the share exchange ratio inappropriate and highly unfavourable to its shareholders.
Protections for Management, not Minority Shareholders
On 15 May 2025, Tsuruha published responses to shareholder FAQs regarding the proposed business integration. The company noted that:
The final agreement with AEON includes provisions to impose certain restrictions on AEON's exercise of control or influence, thereby ensuring the independence of Tsuruha management and protecting the interests of its minority shareholders .
. AEON has agreed not to transfer or dispose of Tsuruha shares without prior consent and will not acquire more shares without Tsuruha's approval.
AEON may appoint only one non-executive director to Tsuruha's board.
It plans to appoint a new independent outside director who meets Tokyo Stock Exchange independence standards.
Orbis believes that these provisions would serve primarily to entrench the position of Tsuruha's incumbent board and management. While the agreement with AEON provides certain safeguards for Tsuruha management, it offers no meaningful protection for minority shareholders, who will lose their ability to influence the company's direction or to hold leadership to account under AEON's effective control.
Orbis is also concerned that minority shareholders would face significant governance risks as minorities in a listed AEON subsidiary—including the potential for AEON to take the merged entity private on highly unfavourable terms for minorities.
A Flawed Process, Unfavourable Terms, and Unanswered Questions
Orbis supports industry consolidation—which can realise substantial merger benefits—when it is pursued through a fair and transparent process and on equitable terms. However, Orbis strongly objects to both the terms and structure of these transactions, and notes fundamental flaws in the process that led to Tsuruha's decision to enter a Capital and Business Alliance with AEON and Welcia in February 2024. Orbis believes that both the proposed merger and the subsequent tender offer severely undervalue Tsuruha.
Orbis calls on Tsuruha to answer two key outstanding questions:
Why should AEON be allowed to take a controlling position in Tsuruha via a partial tender offer at a nearly 27% discount to the price it paid to acquire a non-controlling stake from Oasis Asset Management in March 2024?
Did the Tsuruha board form an independent special committee to conduct a market check, soliciting alternative bids before its February 2024 decision—and if so, will it now provide transparency on that process and its findings?
Orbis Urges Investors to Vote AGAINST the Proposed Merger at the 26 May AGM
Orbis calls on all shareholders who care about the fairness and integrity of capital markets to vote AGAINST the proposed merger at the upcoming 26 May 2025 Annual General Meeting. The merger requires a two-thirds majority, and is the only opportunity for Tsuruha shareholders to vote on one of the series of transactions that would hand control of Tsuruha to AEON at a steep discount to fair value.
The information contained in this press release is intended solely to share Orbis' views as a long-term shareholder in Tsuruha Holdings Inc. It does not constitute any solicitation to exercise shareholders' voting rights (either independently or jointly with Orbis) or to delegate such rights to Orbis, and Orbis is not seeking any shareholders' agreement regarding voting. Orbis is not soliciting or accepting any proxies, and encourages all shareholders to make their own voting decisions based on publicly available information and their own judgement. This press release reflects Orbis' opinions exclusively. Nothing in this press release constitutes investment advice.
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