(Bloomberg) -- Kirin Holdings Co. extended again its deadline to buy a majority stake in Fancl Corp., as a hedge fund’s sizeable holdings in the skincare brand raised doubts about the brewer’s ability to secure control.
Kirin set a new Sept. 11 end-date for its tender offer, even as it said in an exchange filing Wednesday that it had already received enough shares of Fancl to complete the takeover bid. But shareholders are free to retract their offers anytime until the deadline.
The extension came as Kirin said Hong Kong-based MY.Alpha Management HK Advisors Ltd. boosted its stake in Fancl, giving the hedge fund more than 10% of voting rights. Japan’s takeover rules require the acquirer, in this case Kirin, to extend the offer period for the target in the event of a new major shareholder materializing.
READ: Kirin Raises Fancl Tender Offer Price Seeking to Secure Deal
The pressure on the Japanese brewer to raise its offer price for Fancl is another example of the growing conflict between investors and Japanese corporate giants over perceived under-valued stock. Activist investors in Japan, emboldened by the government’s attempts to improve corporate governance, have extracted recent wins from company management. This month, Seven & i is facing a buyout proposal from a Canadian rival after years of pressure from investors to unlock more value from its assets.
Kirin acknowledged that MY.Alpha has raised its stake in Fancl to 10.69% on voting rights ratio. The disclosure of a significant position by MY.Alpha may encourage other investors to come forward with their intentions to block the bid at the current price, people familiar with the matter had said in July.
Kirin had initially offered ¥2,690 per share for Fancl, which it revised upwards to ¥2,800. Its bid in June to acquire the two-thirds of Fancl that it doesn’t already own is part of an effort to reduce its reliance on beverages.
Even if the tender offer is complete, shareholders of Fancl can petition courts to seek a fair price or higher payment from Kirin for their shares. In 2023, Tokyo’s court handed activist shareholders a rare victory by saying Itochu Corp’s tender offer price to acquire FamilyMart Co. in 2020 was “too cheap,” mandating Itochu to pay extra to shareholders who petitioned.
Related: Tokyo Court Rules Itochu’s FamilyMart Bid Was Too Low (1)
Should the takeover bid fail, Kirin “will consider options for its health science strategy, such as acquiring other overseas assets,” Chief Operating Officer Takeshi Minakata said earlier this month. The brewer acquired Australian vitamin maker Blackmores Ltd. for more than $1 billion last year, as it seeks to diversify into wellness and healthcare.
--With assistance from Go Onomitsu.
(Updates with details of MY.Alpha increasing stake in Fancl.)
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