RMB Capital Made Shareholder Proposals Upon AGMs of Faith and Nippon Columbia

CHICAGO--()--RMB Capital opposes Faith’s (4295 JP) stock swap acquisition of Nippon Columbia (6791 JP) and made the following shareholder proposals ahead of their annual general shareholders’ meetings (AGMs) in June.

Proposals to Faith:

  1. Termination of stock swap contract
  2. Cash tender offer of Nippon Columbia

Proposals to Nippon Columbia:

  1. Termination of stock swap contract
  2. Proposal of cash tender offer
  3. Formation of a new independent committee and appointment of new legal and financial advisors

More details on “3. Formation of a new independent committee and appointment of new legal and financial advisors”:

At Nippon Columbia, we believe the third-party committee did not function well to secure a fair process, resulting in an unfair stock swap contract, which is not in the best interest of Nippon Columbia’s minority shareholders. To secure a truly fair process, we propose (1) formation of a new independent committee by the independent director, (2) appointment of new legal and financial advisors by the independent committee, and (3) negotiation by the independent committee.

(1) Formation of a new independent committee by the independent director:

Nippon Columbia stated it obtained an opinion from a third-party committee, which they believe is independent. However, these committee members were picked by the interest-conflicted board from the pool of candidates nominated by Iwata Godo, the legal counsel which serves for the interest-conflicted board. As such, we believe the process of forming the committee was flawed. To secure a truly fair process, the independent director should take initiatives to form a new independent committee without the influence of the interest-conflicted directors and the legal counsel.

(2) Appointment of new legal and financial advisors by the independent committee

The existing third-party committee did not hire its own legal and financial advisors and relied solely on the advice and valuation analysis by Iwata Godo and Plutus Consulting, which serve for the interest-conflicted board. Under these circumstances, we believe the opinion of the third-party committee was influenced by the interest-conflicted board, making the entire process severely flawed. The newly formed independent committee should appoint its own legal and financial advisors to gain unbiased advice and valuation analysis.

(3) Negotiation by the independent committee

Negotiation of the transaction was done by two directors at Nippon Columbia without three other directors sent from Faith. One of them was a director and Chief Financial Officer, who was appointed by the directors sent from Faith, however, and she is supposed to work for Faith Group after the transaction. We believe the transaction condition was flawed due to the involvement of the director whose interest potentially conflicts with that of minority shareholders. A newly formed independent committee should lead the negotiation to secure a truly fair process.

Masakazu Hosomizu
Portfolio Manager, Japan investment team
RMB Capital

Contacts

RMB Capital
Masakazu Hosomizu
Portfolio Manager, Japan investment team
mhosomizu@rmbcap.com

Release Summary

RMB Capital opposes Faith’s stock swap acquisition of Nippon Columbia and made shareholder proposals ahead of their annual general shareholders’ meetings in June.

Contacts

RMB Capital
Masakazu Hosomizu
Portfolio Manager, Japan investment team
mhosomizu@rmbcap.com