LOS ANGLES, CALIFORNA AND TOKYO, JAPAN – Dalton Investments has made a public statement that it will vote for all shareholder proposals put forward by activist investor Nihon Global Growth Partners for Toyo Susian to increase its efforts to improve shareholder value. Dalton also believes that the management team at Toyo Susian should proactively respond to TSE request of adopting policies that are “conscious of the cost of capital and stock price” and commit to effective engagement with investors.
We, Dalton Investments Group, are shareholders of Toyo Suisan Kaisha (the Company) through the funds we manage. Since our initial investment, we have engaged in multiple dialogues with IR and management regarding capital policy and other issues. Today, we share the same underlying issues regarding the Company stated within the shareholder proposal and supplementary materials released by Nihon Global Growth Partners (“NGGP”).
We highly value the competitive advantage and growth potential of the instant noodle business, as evidenced by its high return on invested capital (ROIC). In particular, we respect the Company’s track record in the North American market, where it has built an overwhelming market share through years of decisive risk-taking and management efforts. On the other hand, due to the Company’s lack of capital policy and disclosure, we believe that the Company’s management lacks awareness of capital efficiency and the responsibility of the stock price. Despite being a listed company with a market capitalization of nearly 1 trillion yen, we felt that the Company has a limited sense of responsibility to continue dialogue with shareholders. Last year, the Tokyo Stock Exchange (TSE) requested management to adopt policies that are “conscious of the cost of capital and stock price” for all public companies. We believe the Company should respond to TSE’s request with a sense of urgency, and we continued our dialogues with the Company, encouraging a prompt and comprehensive response to their requests, which benefit all shareholders.
The shareholder proposals announced by NGGP are consistent with our awareness of the above issues, and we plan to vote in favor of all shareholder proposals at the shareholders’ meeting in June. This decision is not taken lightly but reflects our deep concern and commitment to the Company’s future. Please note that we have not communicated with NGGP regarding this matter, and this declaration of intent is purely based on NGGP’s press release.