Proxy adviser backs Nintendo founder family office's call for Toyo board reshuffle (updated)

Young Fast Optoelectronics

13/06/2023 13:39

(Adds YFO, Toyo comments, background)
    By Makiko Yamazaki
       TOKYO, June 13 (Reuters) - Proxy adviser Institutional
Shareholder Services Inc (ISS) has recommended that shareholders
of Japan's Toyo Construction  1890.T  vote for six of nine
director candidates backed by the family office linked to
Nintendo's  7974.T  founder.
    Yamauchi-No.10 Family Office (YFO), which now holds 28.51%
of Toyo, is seeking to take the $687 million marine construction
firm private and is calling for a reshuffle of the board that
has resisted its buyout offer.
    The takeover battle comes at a time when the Japanese
government is putting together M&A guidelines to spur
acquisitions by cracking down on unreasonable defence tactics
against credible takeover offers.
    YFO last year offered to pay 1,000 yen per share, higher
than a 770 yen per share offer from an industry rival that Toyo
had endorsed at the time. It took about nine months for the
company to form a special committee to assess YFO's proposal.
    ISS said in a report that YFO's bid was "sufficiently
compelling and reasonably certain," but the board's response
"fell far short of providing reassurance that it had
shareholders' best interest in mind".
    "Based on the above analysis, we believe that a majority
presence of the dissident nominees on the board is warranted to
restore shareholder confidence and introduce the necessary
governance improvements," ISS said.
    ISS has recommended voting against six of 11 director
candidates nominated by the company, saying that the presence of
the remaining five nominees on the board would be needed to
provide continuity.
    YFO said in a statement to Reuters that the way the Toyo
board had handled its proposal reflected the bad habits of
Japanese companies that have hampered the country's capital
markets.
    A separate filing on Tuesday showed YFO has increased its
stake in Toyo to 28.51% from 27.19% previously, after its
standstill agreement with the company expired in May. 
    Toyo released a statement criticising the move as evading
Japan's tender offer rules, which prohibit a bidder from
purchasing shares during the tender offer period.   
   ($1 = 139.4800 yen)

 (Reporting by Makiko Yamazaki; Editing by Jacqueline Wong and
Mark Potter)
 ((Makiko.Yamazaki@thomsonreuters.com; +81-3-4563-2805;))