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Tsuruha shareholders to vote on criticized Aeon merger plan
Tsuruha shareholders to vote on criticized Aeon merger plan

Japan Times

time23-05-2025

  • Business
  • Japan Times

Tsuruha shareholders to vote on criticized Aeon merger plan

Shareholders of Japanese drugstore chain operator Tsuruha Holdings will vote Monday on a proposal which effectively results in its acquisition by supermarket chain Aeon, a move that has already been panned by major investors and proxy advisers. The chorus reflects rising shareholder activism in Japan in recent years as the country's governance reforms embolden investors. Their disappointment in the planned deal centers around the perceived low premium it would pay to Tsuruha shareholders. Aeon, the country's largest supermarket chain operator, last month said it will launch a tender offer to make Tsuruha a consolidated subsidiary at ¥11,400 per share as it tightens its grip on the drugstore market. The announcement, however, received an immediate rebuke from Orbis Investments, the second largest shareholder after Aeon with a 9.7% stake. Aeon had about a 19.5% stake as of Feb. 28. Orbis said the deal is flawed and will allow Aeon to take a controlling stake in Tsuruha on "outrageous terms,' according to the asset manager's presentation document. The deal is unfair, Orbis argues, given that Aeon paid ¥15,500 per share when it bought a 13.6% stake from activist fund Oasis Management in February 2024. Aeon said in a statement that synergies from the planned integration should benefit all stakeholders including Tsuruha shareholders. Orbis, a value-style but not an activist investor, said it will oppose Tsuruha's proposal of a share exchange with Welcia Holdings, another drugstore already majority-owned by Aeon, to make Welcia a wholly-owned subsidiary of Tsuruha. The U.K. asset management firm was joined by Norges Bank in opposing the deal. Norway's sovereign fund holds 1.5% of Tsuruha's shares, according to data compiled by Bloomberg. Two major proxy advisers — Institutional Shareholder Services and Glass Lewis & Co. — also recommended opposing the proposal for similar reasons, a move that could prompt some Japanese asset managers to side with Orbis. The business integration proposal needs a two-third majority to pass. "I think we have a good chance of winning at the Tsuruha (annual general meeting),' said Brett Moshal, head of the Japan investment team at Orbis Investments. "We have been spending a lot of time talking to Tsuruha shareholders, mainly in Japan. I find that the discussions have been hugely encouraging.' Tsuruha's share prices rose above Aeon's tender offer price, a sign investors see chances Aeon may need to raise its price to win over minority shareholders. The race is already on to shore up positions ahead of a possible showdown. Aeon has increased its stake to 26.7% while Orbis also increased its holdings to 10.3%, according to respective disclosures. Akio Hoshi, professor of law at Gakushuin University, said Aeon's proposed price may not satisfy many investors given that Aeon bought its own shares from Nomura in May at a higher price. If the deal is rejected, "that will bring home to companies the importance of setting a fair price in acquisitions,' he added. While it is rare for a Japanese company to have management proposed plans rejected at an annual general meeting, there have been precedents. In 2007, shareholders of steelmaker Tokyo Kohtetsu blocked a takeover by a unit of Nippon Steel in a major upset, marking a milestone in Japan's corporate history. Daisuke Aiba, analyst at Iwai Cosmo Securities, said if the proposal is rejected, Aeon is likely to persist and may get the deal done over the next few months by sweetening their offer.

Oasis says investors back its proposed board changes at Kao
Oasis says investors back its proposed board changes at Kao

Japan Times

time06-03-2025

  • Business
  • Japan Times

Oasis says investors back its proposed board changes at Kao

Activist fund Oasis Management has said there is huge support from other investors for its proposal to shake up the board of Japanese cosmetics and chemical company Kao. Oasis, which holds a 5.2% stake in Kao, has presented five candidates to become outside directors of the company as part of its campaign for faster growth. A showdown looms between Hong Kong-based Oasis and Kao on March 21, when the company's annual general meeting is scheduled. "We've heard an enormous amount of support for our proposals,' Chief Investment Officer Seth Fischer said in an interview in Tokyo. "We've heard from other shareholders about how hard it is to get in touch with management and have a meaningful dialog with them.' Kao rejected Oasis' proposals last month, saying all the candidates lack necessary credentials. Fischer has complained that Kao's CEO, Yoshihiro Hasebe, has met him only once, in a 45-minute meeting that Fischer described as "not substantial and lacking any real details.' Since Hasebe took over as CEO in 2021, Kao's profits declined for three straight years before rising for the first time last year. That recovery has helped its share prices post modest gains — roughly in line with the Topix index. While activist investors are having an increased impact on corporate Japan and its stock market, proposals from shareholders at AGMs are still rarely approved. Proposals that Oasis made to Kobayashi Pharmaceutical over outside directors and a health supplements scandal were rejected by shareholders last month despite Fischer's optimism. Still, Oasis has also had success, such as its victory in installing candidates on the board of Fujitec.

Japan weighs tougher management buyout rules to protect minority shareholders
Japan weighs tougher management buyout rules to protect minority shareholders

Japan Times

time05-02-2025

  • Business
  • Japan Times

Japan weighs tougher management buyout rules to protect minority shareholders

Japan's boom in management buyouts looks set for stricter oversight to protect minority shareholders when companies go private. The Tokyo Stock Exchange will this month consider changes to the Corporate Code of Conduct that would require firms to improve disclosure of assumptions used to calculate the price of buyouts, and to set up a special committee to hear opinions about the proposed deal. The move shines a light on concerns of minority shareholders that have arisen as buyouts in Japan rose to the highest since 2011. Hedge funds including Hong Kong-based Oasis Management and US-based Curi RMB Capital opposed plans by a major drugmaker to go private in 2023, arguing the price was too cheap.

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