Toshiba Machine Co.’s share price soared Monday after the company said Japan’s best-known activist investor, Yoshiaki Murakami, plans a tender offer.
The stock jumped as much as 19 percent, to ¥3,700, in Tokyo for the biggest intraday gain since October 2008. Toshiba Machine said late Friday that it first learned of the possible bid from Murakami vehicle Office Support on Jan. 10, and expects the tender offer to begin Tuesday.
The announcement came just hours after Toshiba Machine confirmed it had agreed to sell its stake in NuFlare Technology Inc. to Toshiba Corp., even though Hoya Corp. had offered to pay a higher price for the shares. It’s not clear whether Murakami is seeking to disrupt or derail the NuFlare deal, which was seen as a snub to minority shareholders. Toshiba was already NuFlare’s largest stakeholder with 52.4 percent when it started the buyout. Toshiba Machine said it will book about ¥10 billion ($91 million) from the sale.
“Murakami-san is looking for a combination of near- and medium-term actions which would lift the value of the shares,” said Travis Lundy, a special-situations analyst who writes for Smartkarma. “It is shaping up to be a hostile bid, but we still do not know terms.”
Toshiba Machine said in a statement it needs 60 days to consider the offer and that it is prepared to issue new shares if Murakami proceeds with his tender before that. It stated that Murakami’s vehicle owned 11.49 percent but did not disclose details of the bid. Office Support, which launched a Japanese language website the day of the release, declined to comment when reached by telephone.
“An activist investor has them in his sights; that should raise expectations for improvements in governance,” said Naruhiko Takatsuji, a senior analyst at Ichiyoshi Research Institute. “You could expect more pressure for shareholder returns, whether as a share buyback or higher dividend rate.”
Last month, Minami Aoyama Fudosan, another fund linked to Murakami, reported it had a stake in NuFlare, which provides equipment used to make computer chips, and said it may give advice or make proposals to management.
Murakami is considered one of the pioneers in Japan’s battle for shareholder rights. He put forward the country’s first hostile takeover bid by an investor. In 2007 he was convicted for insider trading and sentenced to two years in prison, which was suspended on appeal.
About a quarter of Toshiba Machine’s 44-page statement on Friday was dedicated to detailing Murakami’s previous deals. The company said his track record shows a history of disposing of shares at a profit, and could go counter to management’s mission of increasing enterprise value.
“One takeover defense that Toshiba Machine could undertake would be to launch its own tender for its own shares at a premium to the price that Murakami launches at,” Lundy said. “If Murakami’s tender fails, he would agree to sell to Toshiba Machine. It would return cash and get him out.”