Takeover bid for Daibiru to add 2.7% to AJOT's NAV

RNS Number : 0689U

AVI Japan Opportunity Trust PLC

30 November 2021

 

AVI Japan Opportunity Trust plc (the "Company")

Takeover bid for Daibiru at 50% premium to add 2.7% to AJOT's NAV

London 30 November 2021

Today, after market close in Japan, Mitsui O.S.K. Lines ("MOL") announced a takeover bid for its listed subsidiary real estate business Daibiru at a share price of ¥2,200, a 50% premium to the undisturbed closing price. Daibiru accounted for 5.3% of AJOT's NAV at its undisturbed closing price; valuing it at the tender price would add 2.7% to AJOT's NAV.

AJOT has been a shareholder in Daibiru since September 2020 and we have been engaging with its Board of Directors and parent company, MOL, on ways in which to improve its corporate governance and valuation. We had proposed that Daibiru was acquired by MOL, highlighting the conflicts of interest with minority shareholders that we believed were responsible for the shares trading at a ~50% discount to our estimate of fair value.

While we are pleased that MOL has taken steps to address these issues, we believe the ¥2,200 bid significantly undervalues Daibiru given flaws in the procedures for calculating the offer price that conflict with Japan's Ministry of Economy, Trade and Industry's Fair M&A Guidelines. We are evaluating the bid in full and will be engaging with both Daibiru and MOL over the coming weeks to seek a price for minority shareholders that more accurately reflects true fair value.

The potential for take-outs of listed subsidiaries on the back of improvements in corporate governance has been a key theme within AJOT's portfolio, and the Daibiru tender offer follows similar successes with Secom Joshinetsu earlier in the year, and two of Toshiba's listed subsidiaries in November 2019. Including the expected NAV uplift from today's announcement, the four subsidiary buy-ins have added 13% to AJOT's NAV since inception. An additional 10% of AJOT's portfolio aside from Daibiru remains exposed to the listed subsidiary theme.

Contact

Daniel Lee

[e-mail]

LEI: 894500IJ5QQD7FPT3J73

 

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