The share price of Aska Pharmaceutical Holdings (“Aska”) has declined significantly following the September 30 release titled “Notice Regarding the Termination of Procedures Based on the Policy for Responding to Large-Scale Purchases of the Company’s Shares, etc., in Connection with the Withdrawal of the Explanatory Statement by Dalton and Others.” We would like to share our views on this matter.
- We believe that the cause of the share price decline lies in shareholder disappointment with Aska’s management, which has distorted the fundamental principle of the equity market—free trading of shares.
- As one of Aska’s major shareholders, we will continue to engage in dialogue and consider and exercise all shareholder rights with the aim of enhancing the company’s corporate value and the common interests of its shareholders. We will continue engaging with the company ahead of the next Annual General Meeting.
We have expressed our views on this matter in the two releases listed below. For your reference, we have summarized the key points once again, and would greatly appreciate your review.
- Key Points from the September 9 Release
All of our engagement activities with our portfolio companies are solely aimed at enhancing corporate value and the common interests of shareholders. The MBO proposal that Aska emphasizes is merely one among many options, and we have never forced or steered toward any particular choice. Generally speaking, management has an inherent incentive to maintain the status quo, and it is not detrimental to the interests of other shareholders for a major shareholder to request that all strategic alternatives be considered and evaluated with appropriate speed.
Aska has been suggested, citing our track record of re-investments, that there is a “conflict of interest between shareholders who wish to sell at a high price and shareholders who wish to buy at a low price.” However, the decision on whether to privatize, along with the terms and conditions such as price, rests solely with the board of directors, and we do not intervene in that process. Accordingly, this claim is clearly unfounded.
The free trading of shares in the market is a fundamental principle underpinning the public capital markets. Any reckless act that distorts this principle is not merely an internal issue for the parties involved, but an act that undermines the efforts and achievements of the Tokyo Stock Exchange and the government in capital market reforms. Aska’s management should be fully aware of this.
For further details, please refer to the release here.
- Key Points from the September 30 Release
We have serious concerns, as shareholders, regarding Aska’s recent response.
While we proposed that Aska consider privatization, we repeatedly and explicitly conveyed that the ultimate decision rests with the Yamaguchi family, and that we would respect and support Aska’s conclusion, whatever it may be. The fact that Aska failed to disclose this message demonstrates a highly selective and arbitrary disclosure posture.
Aska ignored our requests for constructive dialogue and instead introduced the current Policy. On June 23, in response to Aska’s concerns about potential conflicts of interest, we carefully addressed those concerns in an email, stating: “We consider it a shortcoming on our part that you have come to hold such concerns and distrust. As we have said repeatedly, we remain committed to addressing your concerns sincerely and hope to continue constructive dialogue going forward.” (original text). Aska did not even reply to this email and proceeded to announce the Policy.
We have, in the past, facilitated introductions and meetings with executives of our portfolio companies that had undertaken privatizations, in order to assist Aska’s deliberations. In one such meeting with President Yamaguchi of Aska, the executive explained that privatization had been a proactive decision aimed at enhancing corporate value, that our engagement had been friendly and constructive, and that post-privatization management had been proceeding smoothly. In addition, we informed Aska that we could also introduce other parties involved in similar cases to further support Aska’s considerations. Unfortunately, Aska has failed to disclose these efforts and initiatives on our part, and has instead repeatedly asserted that we are attempting to force privatization upon our investee companies.
Despite our repeated statements that we have no intention of interfering in Aska’s management, Aska has disregarded this and, through a strained rationale, claimed that our approximately 30% shareholding constitutes, in a negative sense, a de facto “acquisition.” On that basis, Aska has demanded that we provide information equal to or greater than that required of an acquirer aiming to obtain management control through the majority ownership of shares.
From both Aska’s above-mentioned actions and the contents of the information list, it is evident that whatever information we might provide would be dismissed on a prejudiced basis, with the predetermined conclusion that we are an “acquirer” acting “inappropriately.” It has therefore become clear to us that Aska has no intention of engaging in constructive dialogue, and we have determined that providing further information under such circumstances would be futile.
For further details, please refer to the release here.