CHICAGO--(BUSINESS WIRE)--RMB Capital (“RMB”), a Chicago-based investment advisory firm, is a long-term shareholder of Sanyo Shokai Ltd. (8011 JP, “Sanyo”) and owns more than 5% of the firm’s total outstanding shares. RMB requests that the board of directors of Sanyo hire investment banks as advisers and seek a strategic buyer of the firm. RMB believes Sanyo should join a strategic partner that has larger capital and potential to complement its capabilities, in order to leverage Sanyo’s strong operational assets including its brands, production technologies and talents.
RMB lists the following five reasons for Sanyo to seek a strategic buyer:
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Four consecutive years of losses are expected to risk shareholders’ value
Sanyo has eliminated a large portion of its workforce through three early retirement programs in the past, and reduced the number of brands and stores in its portfolio, all while cutting its marketing expenses in recent years. Last year, Sanyo changed course and added to its marketing efforts with new brands and stores, then made strategic acquisitions of digital marketing solutions to enhance its digital transformation initiatives. However, management failed to turn around Sanyo’s business despite these actions, further damaging the shareholders’ value of Sanyo and resulting in the resignation of its president, Mr. Iwata. RMB is concerned that the motivation of Sanyo’s talented employees may deteriorate under this ongoing business underperformance and repeated layoffs, resulting in serious damage to Sanyo’s tangible and intangible assets.
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Sanyo does not have enough scale to reorganize its sales channel
RMB recognizes Sanyo has to keep investing to transform its sales channels from traditional department stores to digital channels, including electronic commerce (EC). RMB believes Sanyo lacks enough scale to bear the costs of these mounting digital investments going forward.
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The company does not have enough capacity to enhance its brand portfolio
RMB also recognizes Sanyo lacks strong in-house apparel brands to survive in the competitive apparel industry, and has to add new proprietary and third-party brands. However, RMB believes that such initiatives will be even harder going forward, given the high valuation assigned to the strong brands as a result of global consolidation in the apparel industry.
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Sanyo has appealing technologies for a turnaround
RMB recognizes Sanyo has strength in its sewing skills and overall production technologies that are cultivated through its long history as a high-end apparel company. RMB believes Sanyo’s craftsmanship will be more appreciated by consumers who select long-lasting apparel products based on increased awareness of environmental issues and sustainability. RMB expects traditional high-fashion like Sanyo’s will have more value in the long-run while the “fast fashion” business fades.
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Sanyo should seek a strategic buyer for synergy
RMB believes Sanyo’s corporate value lies in its strong skills to create and market high quality apparel products. RMB requests Sanyo’s board of directors to seek a strategic buyer with the help of investment banks to protect and leverage Sanyo’s core assets and complement these capabilities.
About RMB Capital
Headquartered in Chicago, RMB Capital is an independent investment advisory firm that serves high-net-worth individuals and families as well as institutional investors. Its businesses include wealth management, family office services, asset management, and retirement plan consulting. Its asset management business specializes in long-term, concentrated, active investing strategies with coverage that spans the market-cap spectrum and the globe. To learn more about RMB, visit https://rmbcapital.com.
