Asset Value Investors (AVI) Demands Tokyo Radiator Return Cash on Deposit with its Parent Company, KKR-Owned Marelli Corporation and Strengthen its Independence

Conflicted “Listed Subsidiary” Holding Structure Responsible for Unproductive Cash Accumulation in Excess of Market Cap

AVI Submits Shareholder Proposals to Address Conflicts, Corporate Governance, Capital Inefficiency and Undervaluation

LONDON--()--Asset Value Investors (“AVI”) announced today that it has submitted shareholder proposals to Tokyo Radiator Mfg. Co., Ltd. (TYO 7235) to address a conflicted “listed subsidiary” shareholder structure responsible for, among other things, idle cash in excess of market capitalization.

AVI have been shareholders of Tokyo Radiator for nearly four years, putting forward a holistic set of suggestions to grow corporate value. While pleasing that Tokyo Radiator has taken on board our suggestions to invest in future technologies by forming an NEV (New Energy Vehicle) Strategy Development Office in April 2021, and appointed an additional independent director in 2019, Tokyo Radiator has failed to make adequate progress to protect the interests of minority shareholders.

Over half of Tokyo Radiator’s ¥9.9 billion cash balance is on deposit with its controlling shareholder, Marelli Corporation (formerly Calsonic Kansei), the Nissan-affiliated auto parts manufacturer acquired by Kohlberg, Kravis & Roberts (KKR) in 2017.

AVI’s CEO Joe Bauernfreund issued the following statement:

“KKR is well aware that listed subsidiaries like Tokyo Radiator suffer from poor corporate governance and undervaluation as a consequence of conflicts of interest between the controlling shareholder and minority shareholders.

KKR has been an active participant and beneficiary in transactions, such as its acquisition of Marelli, spinning-off listed subsidiaries to remove the conflicts responsible for the value gap.

It is therefore ironic to see KKR, as owner of Marelli and advocate of corporate governance reform, exploit its position as controlling shareholder to operate Tokyo Radiator as a convenient source of cheap cash for itself at the expense of minority shareholders.

The President of Tokyo Radiator is appointed from Marelli, raising questions about whose interests are most important for Tokyo Radiator. The fact that Tokyo Radiator’s idle cash excesses its current market capitalization speaks for itself.

KKR would normally criticize a listed subsidiary parking cash with its controlling shareholder. KKR should practice what it preaches.

Despite numerous efforts by AVI to hold constructive dialogue, KKR have declined to address Tokyo Radiator issues”

AVI’s shareholder proposals call for the return of the ¥5.5 billion cash on deposit with Marelli to Tokyo Radiator’s shareholders in the form of a special dividend.

AVI has also proposed the establishment of an Audit and Supervisory Committee and majority independent director Nomination and Compensations Committees to bring greater objectivity to help counteract the conflicts of interest inherent in the company’s ownership structure.

Another proposal introduces a stock-based compensation system to create incentives for senior management that are aligned with maximizing long-term profitability and corporate value.

A more detailed presentation and AVI’s proposals is available at AVI’s dedicated website


Joe Bauernfreund


Joe Bauernfreund