Activist fund tries to defeat deal between Goldman Sachs, Nippo and Eneos
One of Asia’s most aggressive activist funds has used a high-profile online campaign to disrupt a buyout deal involving Goldman Sachs, Japan’s largest energy group and an 87-year-old construction company.
Oasis, a Hong Kong-based hedge fund, has launched a website that lists a personal email address and other contact information for Nippo Corporation’s head of business planning, encouraging applicants to make a buyout offer for the group. of construction.
The fund targets an operation initially presented by the companies involved as a mark of progress in corporate governance in Japan. Hundreds of listed companies in the country are subsidiaries of large groups which continue to hold substantial or majority stakes in the entities.
Eneos, a Japanese energy group, owns a 57% stake in construction subsidiary Nippo, which it said it had bought and delisted. Eneos opted for a structure in the deal that commits Goldman Sachs’ investment banking unit, a move that has raised concerns among minority shareholders of being at a disadvantage.
The structure leaves the overwhelming “economic interest” in the construction company to the US investment bank, according to investors who complained directly to Nippo.
Oasis said Nippo was open to offers and Eneos’ approaches would not be treated as hostile, citing assurances last week from both companies.
Nippo declined to comment, saying it would clarify its position once the regulatory review of its deal with Goldman Sachs is completed.
Eneos did not respond to a request for comment. Goldman Sachs declined to comment.
Activist investors have long criticized these structures as inherently unfair to minority shareholders and prone to poor governance on the part of the boards of directors of parent companies and subsidiaries. Some groups accused of bad corporate behavior, such as the Hitachi conglomerate, have responded by buying or selling publicly traded subsidiaries.
Pursuant to the tender offer, which proposes the creation of two classes of shares, an ad hoc structure created by Goldman Sachs will own 49.9 percent of the voting shares and 80.1 percent of the shares. without voting rights. Oasis called the combined 65% stake a “financial arbitrage” in favor of Goldman Sachs.
Oasis said last month that the deal “takes advantage of the ease with which a majority shareholder can force minority shareholders at a cheap price to re-register later, capturing the disparity between the price paid and the actual price of the business and assets ”.
At least four large minority shareholders in addition to Oasis said the offer of 4,000 yen ($ 35) per share for minority shareholders of Nippo significantly undervalues the company and that a fair price should be above $ 5. 600 yen per share.
Japan Catalyst, an activist fund recently created by online brokerage firm Monex, also questioned why the negotiations were conducted exclusively with Goldman Sachs.
“It is not an appropriate decision from the point of view of protecting the interests of minority shareholders to wait for a counter-proposal after the announcement of the agreement in the Japanese market, where the implementation of counter-proposals is far from common, ”the fund said in a letter to Nippo’s board of directors in late September.
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