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Orbis Investment Management Statement on Nippo Corporation
Rhea-AI Impact
(Low)
Rhea-AI Sentiment
(Neutral)
Tags
Rhea-AI Summary
Orbis Investment Management Limited criticized the ENEOS-led privatization agreement with Nippo Corporation as fundamentally flawed and unfair to minority shareholders. The deal proposes a JPY4,000 per share offer, which Orbis argues undervalues Nippo due to its significant non-operating assets. Orbis, alongside other institutional investors, urges the Special Committee to seek competitive offers, properly value Nippo’s non-operating assets, and ensure transparency in the valuation process to protect shareholder interests.
Positive
Addressing concerns of minority shareholders indicates a proactive approach to corporate governance.
Support from multiple institutional investors reinforces the legitimacy of Orbis's claims.
Negative
The proposed privatization price of JPY4,000 per share is viewed as significantly undervaluing Nippo's assets.
The process followed by Nippo's Special Committee is criticized as deeply flawed, raising concerns about governance.
Lack of competitive offers and inadequate valuation disclosures may harm shareholder trust.
ENEOS and Goldman Sachs Offer for Nippo Is Abusive to Minority Shareholders
Process followed by Nippo Special Committee is deeply flawed
LONDON--(BUSINESS WIRE)--
Orbis Investment Management Limited (“Orbis”) is a global investment firm founded in 1990 that is a significant investor in Japanese companies. As signatories of Japan’s Stewardship Code, we monitor and engage with our investee companies including Nippo Corporation (1881:JT). As a long-term investor, Orbis seeks to enter into constructive relationships with companies but has a duty to act in the best interests of its clients.
In September 2021, Nippo announced that it had entered into an agreement with Nippo’s parent, ENEOS Holdings Inc. (5020:JT) and Goldman Sachs whereby Nippo will be privatised for JPY4,000 per share. Orbis believes that the process followed by the Special Committee of the Board of Directors of Nippo formed to approve the transaction is deeply flawed and has resulted in a transaction that is abusive and unfair to minority shareholders who will be forced to accept an inadequate offer that meaningfully undervalues Nippo, given in particular its significant non-operating assets.
A number of institutional shareholders share our sentiment as evidenced by the press releases issued by Japan Catalyst on 24 September, Silchester International Investors on 27 September and Oasis on 4 October. We are broadly supportive of their observations, and we call upon the Special Committee to revoke their support for the transaction until such time as they have:
Invited competing offers from both industry and financial acquirers for Nippo’s operating and non-operating assets
Obtained an appropriate valuation of Nippo’s non-operating assets such as real estate, equity securities and other financial assets
Disclosed the full details of all valuation reports and fairness opinions to allow minority shareholders to decide whether to tender their shares or exercise their right to have a court determine fair value
Imposed a majority of minority approval condition on any transaction in accordance with the Ministry of Economy, Trade and Industry’s Fair M&A guidelines
We are hopeful that Nippo, ENEOS, Goldman Sachs and others who benefit from access to the capital markets share our view that they assume an obligation to treat security holders fairly, and that doing so is essential to protect the public interest in maintaining confidence that capital markets operate efficiently, fairly and with integrity.
Please contact John Christy (john.christy@orbis.com) if you have any questions regarding the contents of this press release.
What are the concerns raised by Orbis regarding the privatization of Nippo Corporation and ENEOS?
Orbis claims the privatization offer of JPY4,000 per share undervalues Nippo's significant non-operating assets and criticizes the process of the Special Committee as flawed.
What is the role of Goldman Sachs in the Nippo Corporation privatization deal?
Goldman Sachs is involved in the transaction as one of the financial advisors facilitating the privatization agreement between ENEOS and Nippo.
What actions is Orbis advocating for regarding the Nippo privatization process?
Orbis calls for the Special Committee to invite competing offers, obtain proper valuations of non-operating assets, and fully disclose valuation details to minority shareholders.
How do institutional investors feel about the Nippo privatization proposal?
Several institutional investors, including Japan Catalyst and Silchester International Investors, share Orbis's concerns about the fairness and valuation of the privatization proposal.
What is the suggested privatization price for Nippo Corporation by ENEOS?
The suggested privatization price for Nippo Corporation by ENEOS is JPY4,000 per share.
