Cosmo Energy's activist investor flags more stake purchase, potential lawsuit (updated)

Cosmo Energy Holdings Co

28/07/2023 10:42

(Recasts with activist group's announcement)
    By Makiko Yamazaki
       TOKYO, July 28 (Reuters) - A group of investors led by
prominent activist Yoshiaki Murakami said it has notified Cosmo
Energy Holdings  5021.T  of intentions to increase its stake in
the Japanese oil refiner and warned against the use of
controversial vote tactics.
    The notice comes after Cosmo shareholders last month
approved a "poison pill" takeover defence against Murakami in an
unconventional vote that excluded the group which owns 20% of
Japan's third-biggest oil refiner.
    In a letter of intent to Cosmo dated July 27 and disclosed
on Friday, the group said it plans to boost its stake to as much
as 24.56%, arguing that management has entrenched itself and
left shares of the company undervalued.
    The vote last month paved the way for the Cosmo board to
implement a poison pill to dilute the activists' stake if the
group buys more shares without following prescribed procedures.
The submission of the letter stating the purpose of the purchase
is in compliance with the procedures.
    Cosmo said in a statement on Friday that the board would ask
the group within five business days to submit a list of
information to allow it to evaluate its intentions for the
additional stake purchase. 
    If the board does not approve the stake increase, Cosmo will
call another shareholder vote on whether to launch the poison
pill, although it has yet to decide whether to exclude the
Murakami group from the count.
    The Murakami group said in the letter that it would request
a court injunction against the poison pill if it is approved
only when the group is excluded from the count.
    The first such vote, adopted by newspaper printing presses
manufacturer Tokyo Kikai Seisakusho  6335.T , was backed by the
Supreme court in 2021. The company had excluded its top
shareholder who at the time had a stake of about 40%.
        The court decision fuelled concerns among governance
experts that it could be interpreted as authorising a board to
refuse to count the votes of certain unwelcome shareholders in
some circumstances.    
    Shares of Cosmo jumped after the news about Murakami's
potential stake increase, finishing up 3.5%.     
   

 (Reporting by Makiko Yamazaki; editing by Robert Birsel and
Susan Fenton)
 ((Makiko.Yamazaki@thomsonreuters.com; +81-3-4563-2805;))