A fund backed by Japan’s most prominent activist investor said Tuesday it is launching a takeover bid of up to ¥25.9 billion for Toshiba Machine Co., even though the former Toshiba Corp. unit has threatened to implement defense measures.
Hostile bids are rare in Japan but have been increasing as the government promotes corporate governance reform to make management more accountable to investors.
City Index Eleventh Co., backed by veteran activist investor Yoshiaki Murakami, said it will offer ¥3,456 per Toshiba Machine share to buy up to 43.82 percent of the molding machine company, spending up to ¥25.9 billion.
The offer price represents an 11 percent premium over Toshiba Machine’s close Friday, when the company revealed the Murakami fund group’s buyout plans. The shares plunged 10 percent Tuesday after shooting up 19 percent Monday.
Toshiba Machine said late Friday it could adopt poison pill measures to fend off acquisition attempts by diluting the holdings of unwanted suitors.
It added that the planned takeover bid could potentially hurt the maximization of its corporate value and shareholders’ interests.
A Toshiba Machine spokesman said Tuesday the firm is examining the tender offer.
City Index Eleventh said in a statement that poison pill measures would buck corporate governance progress in Japan and have a significantly negative impact on market participants.
Murakami-related funds currently hold a combined 11.49 percent of Toshiba Machine’s total voting rights.
A former bureaucrat, Murakami famously led a fund targeting Japanese companies and pushing for greater shareholder returns until he was convicted of insider trading in 2007. He has since resurfaced as an investor, working with his daughter.
Murakami’s typical strategy is to build up a stake in undervalued companies with assets and ask for higher returns to shareholders. Murakami’s funds blocked a buyout attempt last year by U.S. investment fund Bain Capital of small printing firm Kosaido Co. by making a counter bid with a higher price.
Toshiba Corp. holds less than 3 percent of Toshiba Machine, having sold the bulk of its stake during a management crisis in 2017.