Asset Value Investors: MOL Statement on Daibiru TOB Based on Dialogue with Daibiru Special Committee | News


LONDON – (BUSINESS WIRE) – December 24, 2021–

Asset Value Investors Limited (“AVI” or “we”) announces that it believes the process followed by the special committee of Daibiru Corporation (TYO 8806) (“Daibiru”) to evaluate the takeover bid of the company mother of Daibiru, Mitsui OSK Lines, Ltd (TYO 9104) (“MOL”) was neither fair nor considered to be the best interests of minority shareholders.

On December 20, 2021, we had a meeting with two members of the Daibiru Special Committee, Mr. Atsushi Miyanoya (Daibiru External Director) and Mr. Atsushi Oi (Daibiru External Director). We were disappointed with comments that pointed out that the Special Committee had embarked on a flawed review process, misunderstood basic assessment methods, and failed to make reasonable efforts to ensure that the transaction takes place under the best possible conditions for the shareholders.

We believe that the review process conducted by the Daibiru ad hoc committee deviated from the general principles of METI’s Fair Mergers and Acquisitions Guidelines for several reasons.

  1. The special committee relied too heavily on the advice of independent financial and legal advisers and accepted suggestions that went against the best interests of minority shareholders. For example, the Special Committee unquestionably accepted the view that direct market controls were not necessary. We believe that market checks would not only have proven that Daibiru’s true fair value exceeded 3,000 yen, but would have enabled Daibiru’s board of directors to better negotiate against the initial MOL 2,000 yen offer.
  2. There were inconsistent comments regarding the use of the widely accepted Net Asset Value (“NAV”) valuation methodology that takes into account the market value of Daibiru real estate. Initially, the special committee said it was advised not to use the net asset value valuation method, but then claimed that the special committee took into account the market value of Daibiru’s real estate. It is clear to us, unsurprisingly given the Committee’s lack of evaluation experience, that these inconsistencies highlight a deep misunderstanding on how to fairly evaluate Daibiru. If the special committee had seriously considered Daibiru’s estimated real estate value of 3,000 yen, it would not have accepted an offer price of 2,200 yen so easily.
  3. The special committee did not consider other options to maximize Daibiru’s enterprise value. When asked if they had explored real estate securitization through a J-REIT and maintaining Daibiru’s listing status, the answer was no, and the only option considered was MOL low-cost takeover bid. This shows that the review process was conducted with one goal in mind: to ensure the success of MOL’s takeover bid.
  4. The special committee was unwilling to consider withdrawing support for the public offering price of 2,200 yen. Following the opposition of several minority shareholders, we asked the Daibiru Special Committee if it reconsidered its opinion on the Takeover Bid and its response was “fundamentally no”. Such disregard for the views of minority shareholders is astonishing, showing the intransigence of the special committee, the lack of concern for the interests of minority shareholders and the priority to ensure the completion of a transaction for the benefit of MOL.
  5. The special committee attempted to argue that the 16 hours spent deliberating on the transaction is proof that the process was fair. We disagree, and it’s the quality of the review that doesn’t matter the length. In fact, the special committee ratified a deal that was pre-arranged – MOL being able to buy Daibiru at a price below the market value of its real estate.

Joe Bauernfreund, CEO and CIO of AVI, said: “We strongly protest against the negligent process led by the special committee which lacks commitment to protect the interests of minority shareholders. We hope that this case will not become a precedent of bad governance of the parent-subsidiary listing situation in Japan. “


About AVI

Asset Value Investors (AVI) is a specialist investment manager in London who has been investing in Japan for over two decades. AVI was founded in 1985 and has been investing in high quality companies that have been undervalued by the stock market for over three decades. AVI’s investment team works with company management and boards to improve the long-term value of the company. AVI is the investment manager of AVI Global Opportunities Trust (total assets of £ 1.3 billion (€ 200 billion) as of November 30, 2021) and AVI Japan Opportunities Trust (total assets of 155.7 million pounds sterling (23.5 billion euros) as of November 30, 2021). Through the two investment funds, AVI has invested in 29 Japanese companies (as of November 30, 2021).

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CONTACT: Daniel Lee



SOURCE: Investors in asset value

Copyright Business Wire 2021.

PUB: 12/24/2021 8:45 a.m. / DISC: 12/24/2021 8:47 a.m.

Copyright Business Wire 2021.


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