Cosmo Energy Holdings said on Tuesday it would call another shareholder vote in December to seek approval for a “poison pill” takeover defense against a group of activist investors, escalating the high-profile battle.
Japan’s third-biggest oil refiner, however, said it will not prevent the group, led by prominent activist Yoshiaki Murakami, from voting this time, unlike the previous vote in June, which had excluded the group’s 20% voting rights.
The tactics, a so-called “majority of minority” vote, has fueled concerns among governance experts, who argue that practice undermines shareholder equality and could embolden companies in Japan to hang on to much-criticized cross-shareholdings as a defense against hostile takeovers.
The June vote approved the use of a poison pill defense to dilute the activists’ stake if they buy more shares in Cosmo without, for instance, stating the purpose of the purchase.
In compliance with the procedures set by the company, the group in July notified the company of its plans to boost its stake to as much as 24.56% from 20.01%, arguing that management entrenched itself and left shares of the company undervalued.
Cosmo examined the plans and decided not to approve the additional stake purchases by the group, citing the lack of value-up strategies, as well as the group’s investment patterns, which it said had resulted in share price drops after the group sold its stake.
But the company said it refrained from eliminating the group from the vote, because the group this time was compliant with the required procedures and clarified the size of the planned purchases and the time frame.