A US activist investment fund on Monday put pressure on Fujitec and NFC, two companies listed on the Tokyo Stock Exchange, to go private through a management and employee buy-out.
Dalton is the largest shareholder in both Japanese companies and its move comes with investor activism on the rise in Japan.
The US fund is proposing an MEBO at Y900 per share for Fujitec, an elevator manufacturer, in an Y87bn ($733m) transaction, and a buy-out at Y900 per share for NFC, a maker of industrial and household chemicals, in a Y25bn transaction.
The offer price represents a premium of about 12 per cent for both Fujitec and NFC against their closing share prices on Monday.
This year has seen an increasing number of shareholder proposals by activist investment funds – including TCI, Steel Partners and Fursa – to Japanese companies, mostly focused on seeking dividend increases.
Dalton, with a 15.3 per cent stake in Fujitec, is proposing the company go private to more easily dispose of unprofitable operations and seek an alliance with a global player.
“We have been telling [management] that they cannot go on allowing the North American operations to bleed red ink,” says Junichiro Sano, chief executive of Dalton in Tokyo.
Dalton objects to Fujitec’s loan arrangement with the founding family’s holding company, which at one point had loans of several billion yen, Mr Sano said.
Fujitec said it would respond to Dalton’s proposal after studying it carefully.
The US investment fund, which holds a 14 per cent stake in NFC, is calling on its management to dispose of its real estate business.
Mr Sano argues that NFC should not be making nearly 20 per cent of its sales from real estate. NFC could not be reached for comment.