(Bloomberg) -- For years, a castle-like museum outside Tokyo was a secret spot for Japanese art lovers prepared to make a nearly two-hour trip from the capital to see its collection of 20th-century masterpieces, including a Monet, a Picasso and several Rothkos, scattered throughout the grounds.
Now the owner of Kawamura Memorial DIC Museum of Art, a publicly listed chemicals maker struggling with financial losses, is considering selling its artwork or even shutting down permanently amid pressure from investors. Hedge fund Oasis Management, known for advocating shake-ups at targeted companies, has disclosed an 8.6% stake in DIC Corp.
“The museum has been in the red for a long time,” DIC spokesperson Hirotaka Komine told Bloomberg News, declining to comment on Oasis in particular but referring to a general push for rationalization and higher capital efficiency. The company will decide what to do by the end of the year, and close in late March to implement the changes which may include downsizing or closing. “It’s hard to operate under the current circumstances,” he said.
The museum opened in 1990 and houses art the company began collecting in the 1970s. Many Japanese corporations and wealthy individuals embarked on a shopping spree for impressionist and modern art masterpieces during the bubble economy of the 1980s, encouraged by surging real estate and share prices. The most famous example of this may have been the 1987 purchase of Vincent van Gogh’s Sunflowers by the insurer now known as Sompo Holdings Inc. for $40 million — the highest price ever for a painting at the time.
In addition to its vast collection, which includes works by Henri Matisse and Pierre-Auguste Renoir as well as more contemporary artists like Mark Rothko and Cy Twombly, the Kawamura museum is also known for its pastoral setting, featuring a vast lawn studded with outdoor sculptures and a lake with several swans.
Oasis founder Seth Fischer says that running the museum doesn’t make sense today, particularly given its small number of visitors.
“The museum is far away, it’s not well-trafficked,” Fischer told Bloomberg TV in September. “Unfortunately, there’s more security guards most days than actual people.”
Activist investors like Oasis and Elliott Management Corp. have for years launched noisy campaigns against Japanese companies’ ownership of underperforming businesses and trophy assets like real estate. Such efforts have found increasing success in recent years as the government’s support for governance reforms and the Nikkei’s rise to record highs helped cast such activist investors, often viewed negatively as corporate raiders, in a more favorable light.
“Clearly there is a a tailwind around corporate reforms and improved capital efficiency,” said Tim Morse at Asymmetric Advisors, which advises institutional investors on Japan equities. “There is really very little reason why companies like DIC should have a valuable art collection that has nothing to do with the business.”
At the same time, DIC is facing growing calls from the public to preserve the museum. The mayor of the local town is backing a public petition calling for it to stay open, gaining over 47,000 signatures as of late September. E-commerce billionaire Yusaku Maezawa, whose collection has included works by Jean-Michel Basquiat, Picasso and Yayoi Kusama, is offering to consider buying important pieces from Kawamura so they remain in Japan. Many art critics also say it would be a shame to remove the works from their current, purpose-built setting.
“This museum is a great treasure, something Japan should be proud of,” said Teiya Iwabuchi, editor of art magazine Bijutsu Techo, adding that its Rothko Room is particularly special, with restrained lighting providing an optimal setting for the glowing hues of the painter’s Seagram Murals series. “Colors that you don’t initially notice gradually begin to emerge. You wouldn’t experience this sensation if you were seeing them right next to other artists’ pieces.”
Critics have called on DIC to give more consideration to social responsibility and philanthropy than benefits for shareholders. Most other corporate art collections in Japan such as Mori Art Museum and Suntory Museum of Art are managed by foundations, which benefit from tax breaks but face restrictions on selling art for profit.
DIC owns and manages the museum. This allows it to include the value of the artwork in its finances and to profit from sales, but also makes the collection an open target for those calling for better management. The total book value for DIC’s 384 works stood at ¥11.2 billion (approx. $77.7 million) as of end-June.
At the very least, the attention over its future seems to have given the museum a second wind. The company said on Monday that it would stay open through March rather than January as previously announced, thanks to a surge in visitors. On a recent Sunday, nearly a hundred people stood in line to catch a shuttle bus to the museum, and an employee had to ask some of them to find other modes of transport.
Mizuki Kanno, a company employee in her 20s, said she’d been meaning to come for years and was put off by the location. “I just want to see it while I still can,” she said.
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