Japan's Cosmo CEO says controversial vote tactics justified in activist defence (updated)
24/05/2023 23:46
(Repeats story to more subscribers)
By Makiko Yamazaki and Yuka Obayashi
TOKYO, May 24 (Reuters) - Japan's Cosmo Energy Holdings
5021.T will exclude its largest shareholder grouping from a
vote on a "poison pill" takeover defence as the group's plans
may conflict with the interest of general shareholders, its
chief executive said on Wednesday.
The vote, to be held in June, would be Japan's second on a
bid to exclude an investor from a shareholder vote on whether to
adopt a poison pill, with implications for growing shareholder
activism and future hostile bids in the country.
Cosmo - 20% owned by the group led by prominent activist
Yoshiaki Murakami - plans to implement a poison pill to dilute
the group's stake if the group buys more shares without taking
proper steps such as submitting a statement of purpose.
"A vote including the group may not properly reflect the
opinion of general shareholders," CEO Shigeru Yamada told
Reuters in an interview.
Japan's third biggest oil refiner follows the footstep of
newspaper printing presses manufacturer Tokyo Kikai Seisakusho
Ltd 6335.T , which in 2021 won such a vote to block a takeover
attempt by an investment fund.
The supreme court backed the Tokyo Kikai vote, which fuelled
concerns among governance experts that the decision could be
interpreted as authorising a board to refuse to count the votes
of certain unwelcome shareholders in some circumstances.
The company has said the group's real purpose of the stake
purchase is to force a large share buyback for the sake of quick
profit and at the expense of longer-term growth, which the group
had denied that was the case.
The step comes as the Ministry of Economy Trade and Industry
(METI) is hammering out a code of conduct for mergers and
acquisitions (M&A) to promote more takeovers and crack down on
"unreasonable" defence tactics that have worried investors both
globally and at home.
Aya Murakami, a member of the group, criticised the
decision, citing the draft guidelines that the use of so-called
majority of minority (MoM) vote should be limited.
"The use of MoM vote should not be allowed as we haven't yet
decided whether to increase our stake or not," Murakami said in
a statement to Reuters.
Yamada said the group's proposals, including a spin off of
Cosmo's renewables unit and consolidation of local refineries,
would hurt the common interest of shareholders, but Murakami
said the issues are related to the company's management policy
and should be decided by a majority vote of all shareholders.
"It appears to be a flagrant violation of the spirit of
equal treatment of all shareholders," said analyst Travis Lundy
of Quiddity Advisors, who publishes on Smartkarma. "Japan thinks
of itself as a nation of strong shareholder rights, except if
you somehow oppose management?"
(Reporting by Makiko Yamazaki and Yuka Obayashi; Editing by
Conor Humphries)
((Makiko.Yamazaki@thomsonreuters.com; +81-3-4563-2805;))