CHICAGO–(BUSINESS WIRE)–RMB Capital (“RMB”), a Chicago-based independent investment advisory firm, has been disputing the case of the tender offer of FamilyMart Co., Ltd. (8028 JP, “FamilyMart”) by Itochu Corporation (8001 JP, “Itochu”), announced in July 2020 at Tokyo District Court (the Court). RMB believed the tender offer price of 2,300 yen per share was unfairly low and requested the Court to revise the price. As a result, the Court recently accepted RMB’s claim and decided to raise the share price to 2,600 yen per share as a fair price.
The Court recognized the independent committee, which was established in the tender offer process to protect minority shareholders’ interest, did not function well and the tender offer process was not conducted fairly for the sake of shareholders, thus the original tender offer price (2,300 yen per share) does not represent a fair value of FamilyMart.
Below are the key findings by the Court:
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The independent committee at FamilyMart, which was supposed to negotiate tender offer conditions, reduced the transaction conditions several times without rational explanations.
The independent committee discussed its negotiation policy in which it may terminate the negotiation in case Itochu did not raise its tender offer price. However, the committee gave up its initial policy and accepted lower tender offer price without sufficient discussion and rationale and only cared for the interests of the executives at Itochu and FamilyMart.
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The independent committee was influenced by executives of Itochu and FamilyMart to give up its initial negotiation policy.
Itochu’s Chairman, both directly and indirectly, influenced the decision making of the related parties, including the independent committee members, with his refusal to raise the tender offer price above 2,300 yen per share. The FamilyMart’s executive team (also ex-employees of Itochu) implied they could force the tender offer transaction without approval of the independent committee and pressured the independent committee members to provide a path to the tender offer.
RMB appreciates the Court’s decision, which recognized the tender offer was not warranted or developed with generally accepted processes of fairness. RMB hopes this Court decision will result in fairer tender offer transactions in Japan going forward, in order to protect minority shareholders’ interests.
Please refer to this link for RMB’s past press releases on this topic.
Contacts
Masakazu Hosomizu
RMB Capital
japan@rmbcap.com