Takara Holdings' board resolved on 10 November to hold an extraordinary shareholders' meeting at 10am on 16 December at the Rihga Royal Hotel Kyoto, and to oppose every item on the agenda. All six items come from ValueAct Japan Master Fund, L.P. The directors who took part in the vote were unanimous, and the three outside directors targeted for removal stayed out of the deliberations on their own proposals. The record date is 11 November. This follows Earlier Tokyo Brief coverage.
What shareholders will vote on
Items one to three would remove three sitting outside directors. Items four to six would elect one candidate each. ValueAct's request says each election item takes effect only if a vacancy arises against the seven-seat limit in the articles, through approval of some or all of the removal items or for other reasons. If there are fewer vacancies than approved elections, the items with the most votes in favour take effect first. ValueAct also says that if all six pass, the board would still have seven members, four of them independent.
ValueAct says funds managed by ValueAct Capital Management hold about 39.4mn Takara shares, roughly 20.0% of shares in issue, which it describes as the largest holding. It argues that the previous mid-term plan missed every financial target, that return on equity fell to 4.6% last fiscal year, and that the board failed to supervise management, including over the Takara Bio tender offer. It says it does not seek control. Its candidates are a former JSR chief executive, a former president of Accordia Golf and a former global chief financial officer of Suntory Global Spirits.
The board's case
The board says the current seven-member board, four of them independent outside directors and two of them women, is the right mix. The three targeted directors were elected at the 26 June annual meeting with 93.76%, 93.74% and 93.70% of votes. The board says it understands ValueAct voted for them, and that removing them about six months later would stall its value-creation plans.
On ValueAct's claim that it refused substantive engagement, the board says it has met the shareholder more than 30 times since April 2020. It says it only declined a request to authorise outside directors to "negotiate" on strategy and board composition.
The restructuring the board says is at stake
The board ties its case to a restructuring still in motion. It decided on 13 February to make Takara Bio a wholly owned subsidiary. After the tender offer succeeded, it reviewed Takara Bio's plans and built into the mid-term plan a programme to cut fixed costs by about ¥2.8bn by the year to March 2028. It now expects ¥2.957bn of savings.
On 2 November Takara signed a basic agreement with the Sumitomo Chemical group to hand over its GMP cell processing contract business. Talks on transferring the in-house gene therapy clinical project continue, so that step is not complete. Takara Bio's voluntary retirement programme drew 148 people against a target of about 120.
The board says it will decide within about two years whether the Japanese food business stays a growth business and whether to continue the CDMO and gene medicine units. Current outside directors, it argues, are best placed to supervise those calls. It also cites an upgraded consolidated forecast for the year to March 2027 and a decision to transfer 70% of a logistics subsidiary.
The board's case rests on its own account of events. ValueAct's response to the board's reading of the dialogue is not in the notice.