Dairy producer Morinaga Milk Industry Co. is mulling setting up an advisory panel of outside experts with an eye toward exploring business integration with snack-maker Morinaga & Co., sources close to the matter said Tuesday.
The move came as a Singapore-based investment fund, a Morinaga Milk shareholder, demanded the company reconsider integrating their businesses after merger talks between the two Japanese companies with shared origins failed in March 2017 due to differing views on streamlining measures and management personnel.
Lone Alpha Capital Management Pte., established last summer, has a nearly 4 percent stake in Morinaga Milk and is likely to have also acquired a stake in the snack company, the sources said.
The introduction of an advisory panel, which will examine business strategies and give advice to the company’s board of directors, is among proposals made by the investment fund.
Though Morinaga Milk and Morinaga & Co. both have been posting solid earnings, their operations are heavily dependent on the domestic market, which is likely to dwindle due to Japan’s declining population.
A growth plan in documents with more than 100 pages compiled by the investment fund and presented to Morinaga Milk this spring criticized the company for scrapping the merger plan in 2017 which was evaluated highly by the market. A copy of the documents were obtained by Kyodo News.
It also pointed out that Morinaga & Co. is the best partner for Morinaga Milk, considering the synergies anticipated through the streamlining of domestic plants and logistics facilities as well as improvement of efficiency in research and development.
Morinaga Milk Industry was spun off from Morinaga & Co. in 1949. Morinaga & Co. is its leading shareholder with a stake of 10.6 percent as of March.
The investment fund refrained from commenting on the matter, while Morinaga Milk confirmed it had received the fund’s opinion.
“We are considering various options to improve our corporate value, but we will first consider strengthening our health and nutritional food business, functional ingredient businesses and overseas operations that are key areas of our growth strategy,” a Morinaga official said.
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