Independent Proxy Advisory Firm Glass Lewis Joins ISS in Recommending Sapporo Shareholders Vote 'FOR' 3D Investment Partners' Director Nominee Paul Brough

Associated Press

17-03-2025

3D Investment Partners Pte. Ltd., the asset management company of 3D OPPORTUNITY MASTER FUND (collectively referred to as '3D'), today announced that a second independent proxy advisory firm, Glass, Lewis & Co. ('Glass Lewis'), has recommended that shareholders of Sapporo Holdings Limited ('Sapporo' or 'the Company') (2501.T) vote 'FOR' the appointment of 3D's director nominee Mr. Paul Brough at the Company's 101st Annual General Meeting of Shareholders (the 'AGM'), scheduled to be held on March 28, 2025.
In its report, Glass Lewis determined that 'credible concerns regarding [Sapporo]'s historical performance and strategic execution – including with respect to critical M&A and capital allocation efforts – as well as a raft of continuing governance concerns' provide 'compelling cause for investors to support [3D]'s resolutions.'
Glass Lewis joins Institutional Shareholder Services ('ISS') in recommending that shareholders vote in favor of the election of Mr. Brough. Glass Lewis concluded he is an 'independent candidate with relevant expertise' and 'represent[s] a strong and decidedly low-risk addition to [Sapporo's] board.' Glass Lewis also questioned whether incumbent Outside Director Makio Tanehashi is 'well-suited to offer unambiguously independent oversight,' noting that he is 'affiliated as an extension of Sapporo's legacy cross-shareholding dynamics.'
In making its recommendation, Glass Lewis noted the following:
Performance
'[T]he Company has consistently trailed its peers across a wide range of fundamental metrics (e.g. ROE, operating profit margin, EBIT margin, revenue and EBIT growth rates), during which, as [3D] highlights, Sapporo has also routinely missed its own guidance to investors and the market more broadly…'
'[B]ased on data going back to FY1985, the Company has never achieved its current long-term ROE target of 10%, offering a rather shaky basis on which to conclude Sapporo is, without further change, likely to transcend a lengthy history of missed guidance.'
'[T]here appears to be very little cause for investors to conclude Sapporo's trailing performance, [without 3D]'s influence, represents a compelling bulwark for management and the board, and further do not consider there exists compelling reason for shareholders to be confident in the achievement of Sapporo's mid- to long-term objectives or in the board's ability to effectively oversee major, capital-intensive initiatives.'
Board Oversight Failures
'[W]e share [3D's] concern that the audit and supervisory committee is chaired by Toru Miyaishi, who is not independent.'
'The remaining members of the audit and supervisory committee other than Mr. Miyaishi (i.e. Mr. Yamamoto and Ms. Tanouchi), though independent, do not appear to offer skill sets and expertise well suited to Sapporo's current state and intended strategic trajectory. Given the fundamentally critical nature of the audit and supervisory committee's role at this juncture, we consider this apparent skill gap — which we do not believe Sapporo directly disputes in persuasive fashion — should be disconcerting to investors, particularly given the Company's legacy misadventures in capital allocation.'
'[A] raft of continuing governance concerns... raise meaningful doubts around Sapporo's somewhat nebulous and to-date plodding effort to reallocate capital from its large, low synergy real estate business to its underperforming alcoholic beverages business.'
'[There is] considerable concern whether management and the board will: (i) effectively identify and pursue those alternatives which result in the greatest possible value for Sapporo; and (ii) effectively and efficiently reallocate proceeds to thoroughly due diligenced, value maximizing opportunities.'
'[T]here exists compelling cause to conclude Sapporo's extant governance framework — including the core architecture underpinning the audit and supervisory committee and the board's ongoing review process — warrants revision at this time.'
Appointment of Mr. Paul Brough as an Outside Director
'[Mr. Brough's] prior history, including his time with Toshiba, establishes regional bona fides and direct familiarity with critical, time-sensitive review and engagement architecture.'
'We… believe [Mr. Brough] would represent a strong and decidedly low-risk addition to a board which has very evidently and consistently struggled to timely appraise the most attractive alternatives available to the Company.'
Glass Lewis concluded, '[W]e believe [3D]'s proposals represent a particularly compelling opportunity to install an independent, well-qualified director credibly prepared to meaningfully contribute to critical deliberations surrounding Sapporo's strategic trajectory.'
3D is pleased that both leading independent proxy advisory firms have recognized the need to augment Sapporo's Board with a highly qualified, independent director as Sapporo faces critical and irreversible decisions regarding the divestiture of its real estate business and the allocation of the proceeds.
3D encourages Sapporo shareholders to consider the recommendations put forth by ISS and Glass Lewis and vote FOR its proposal to appoint Mr. Brough as an outside director as a member of the Audit and Supervisory Committee, and also vote AGAINST Mr. Tanehashi's reappointment as an outside director at the Company's upcoming AGM.
Note: The passages in quotation marks ("") are direct quotes excerpted by 3D from the Glass Lewis report. The portions in brackets ([]) have been added by 3D for additional clarity/context. Permission to use these quotes from Glass Lewis was neither explicitly sought nor obtained.
About 3D Investment Partners Pte. Ltd.
3D Investment Partners Pte. Ltd. is an independent Singapore-based Japan focused value investing fund manager founded in 2015. 3D Investment Partners Pte. Ltd. focuses on partnering with managements who share its investment philosophy of medium- to long-term value creation through compound capital growth and a common objective of achieving long-term returns.
Disclaimer
This press release is provided for informational purposes only and does not constitute an offer to purchase or sell any security or investment product, nor does it constitute professional or investment advice. This press release should not be relied on by any person for any purpose and is not, and should not be construed as investment, financial, legal, tax or other advice.
3D Investment Partners Pte. Ltd. and its affiliates and their related persons ('3DIP') believe that the current market price of Sapporo does not reflect its intrinsic value. 3DIP acquired beneficially and/or economic interests based on its own idea that Sapporo securities have been undervalued and provides attractive investment opportunity and may in the future beneficially own and/or have an economic interest in, Sapporo securities. 3DIP intends to review its investments in Sapporo on a continuing basis and, depending upon various factors including, without limitation, Sapporo's financial position and strategic direction, the outcome of any discussions with Sapporo, overall market conditions, other investment opportunities available to 3DIP, and the availability of Sapporo securities at prices that would make the purchase or sale of Sapporo securities desirable, 3DIP may, from time to time (in the open market or in private transactions), buy, sell, cover, hedge, or otherwise change the form or substance of any of its investments (including the investment in Sapporo securities) to any degree in any manner permitted by any applicable law, and expressly disclaims any obligation to notify others of any such changes.
3DIP provides no representation or warranty, either expressed or implied, in relation to the accuracy, completeness, or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets, or developments referred to herein. 3DIP expressly disclaims any responsibility or liability for any loss howsoever arising from any use of, or reliance on, this press release or its contents as a whole or in part by any person, or otherwise howsoever arising in connection with this press release. 3DIP hereby expressly disclaims any obligation to update or provide additional information regarding the contents of this press release or to correct any inaccuracies in the information contained in this press release.
3DIP disclaims any intention or agreement to be treated as a joint holder (kyodo hoyu sha) under the Financial Instruments and Exchange Act of Japan, a closely related party (missetsu kankei sha) under the Foreign Exchange and Foreign Trade Act with other shareholders, or receiving any power or permission to represent other shareholders in relation to the exercise of their voting rights, and has no intention to solicit, encourage, induce or require any person to cause other shareholders to represent such voting rights.
3DIP does not have the intention to make a proposal, directly or through other shareholders of Sapporo, to transfer or abolish the business or assets of Sapporo and/or Sapporo group companies at the general shareholders meeting of Sapporo. 3DIP does not have the intention and purpose to engage in any conduct which constricts the continuing and stable implementation of business of Sapporo and/or Sapporo Holdings group companies.
This press release may include content or quotes from news coverage or other third-party public sources ('Third-Party Materials'). Permission to quote from Third-Party Materials in this press release may neither have been sought nor obtained. The content of the Third-Party Materials has not been independently verified by 3DIP and does not necessarily represent the views of 3DIP. The authors and/or publishers of the Third-Party Materials are independent of, and may have different views to 3DIP. The quoting Third-Party Materials in this press release does not imply that 3DIP endorses or concurs with any part of the content of the Third-Party Materials or that any of the authors or publishers of the Third-Party Materials endorses or concurs with any views which have been expressed by 3DIP on the relevant subject matter. The Third-Party Materials may not be representative of all relevant news coverage or views expressed by other third parties on the stated issues.
In respect of information that has been prepared by 3DIP (and not otherwise attributed to any other party) and which appear in the English language version of this press release, in the event of any inconsistency between the English language version and the Japanese language version of this press release, the meaning of the Japanese language version shall prevail unless otherwise expressly indicated.
Koshida: [phone]
KEYWORD: JAPAN ASIA PACIFIC
SOURCE: 3D Investment Partners Pte. Ltd.
Copyright Business Wire 2025.
PUB: 03/16/2025 11:00 PM/DISC: 03/16/2025 11:02 PM