Tokyo exchange's landlord gets backing for 'poison pill' bid defence
26/06/2018 13:26
By Junko Fujita
TOKYO, June 26 (Reuters) - Shareholders in the landlord of
the Tokyo Stock Exchange (TSE) approved a "poison pill" defence
against hostile investors on Tuesday, after an April run-up in
the property company's shares fuelled speculation of a possible
bid.
Heiwa Real Estate Co 8803.T had asked its investors to
back renewing the defensive measure to protect itself from
potentially "abusive" investors for the next three years, while
it works to redevelop an area of office buildings around the
exchange.
The move, approved at Heiwa's annual meeting, runs counter
to a national decline in such defensive moves as Prime Minister
Shinzo Abe's administration pushes for better corporate
governance and treatment of shareholders.
In this month's spate of annual meetings, 63 Japanese
companies sought approval to renew poison pills, down by about
half from last year, according to Daiwa Institute of Research.
The TSE asks companies to justify any defensive measures
because they could impact the rights of shareholders and have
the potential to be abused to serve the interests of management.
A spokesman for the Tokyo-based property developer defended
the poison pill, saying: "If an abusive investor becomes our
shareholder, we might not be able to complete the project."
A TSE spokesman declined to comment on Heiwa's defense
measures. The exchange reviews all poison pill proposals but
doesn't have veto rights. The TSE's operator, Japan Exchange
Group Inc. 8697.T , doesn't have a poison pill arrangement.
Like many poison pills, Heiwa's includes a provision to
issue warrants - rights that can be converted into shares -
which would dilute the stake of an investor that acquired a
certain stake in the company. It also lets the company set up an
"independence committee" of internal and outside members to
review the appropriateness of any bids.
Of the 3,625 TSE-listed companies, 396 have warrant-type
poison pills, down from a peak of 461 in 2008, according to the
exchange. For the same period in the United States, the number
plunged to 270 from 1,206, according to FactSet Research
Systems.
"Shareholders welcome a takeover bid above anything because
the bid translates to a premium over the current market price of
30 percent or more," said Stephen Givens, a lawyer specialising
in corporate governance.
But Hidenori Yoshikawa, senior consultant at the Daiwa
institute, said: "Poison pills can make good sense because they
force an abusive investor to explain why it needs to own a large
stake, and companies can question if the investor is serious
about managing the company."
Heiwa's poison pill passed despite a relatively high 37
percent of its shares being held by foreign institutions.
The stock surged 19 percent during two weeks in April amid
rumours of a takeover by a foreign fund, and increased further
when the company announced a share buyback.
Heiwa said it had not been approached by any potential
bidders, and the stock has given up almost all of its April
gains. It now trades at barely half the company's net asset
value, reckons Nomura Securities Co analyst Daisuke Fukushima.
(Reporting by Junko Fujita; Editing by William Mallard and Mark
Potter)
((813-6441-1840, junko.fujita@thomsonreuters.com, Reuters
Messaging:junko.fujita.reuters.com@reuters.net;))