Even stocks that have more than doubled in price after being acquired by activists! Be cautious of the risks of delisting and corporate turmoil.

moomooニュース日本株 wrote a column · Dec 11, 2023 14:34

Activists (assertive shareholders) are increasing dramatically from 2022 to 2023. From their perspective, if companies accept their proposals and actually increase corporate value, the stock price will rise, leading to a win-win relationship between investors, including activists, and the companies.
In fact,When activities such as activist shareholding or increasing purchases, as well as proposals to companies, become apparent, the stock price often rises.On the other hand, companies may dislike activist interventionsDelistingChoosing delisting or changing management can lead to confusion within the company.Cases where confusion occurs within the company.There are also cases where confusion arises.

An example where stock prices rose due to activist shareholders.
As an example of a case where stock prices rose due to activist intervention, Oasis Management (Hong Kong), an activist, is calling for the replacement of external directors. $Tsuruha Holdings (3391.JP)$Cases where Oasis is requesting changes such as the replacement of external directors.With Oasis's shareholding and buying back shares, Tsuruha's stock price has been rising with each proposal..
There have been reports that the company is considering delisting in opposition to the activists' proposals, which has become a factor in the stock price fluctuations. According to Bloomberg dated the 8th of this month, Tsuruha is exploring privatization through acquisition acceptance, and it was reported that multiple investment funds including Bain Capital are considering acquisitions. On the 11th, the stock price has risen by 25.53% compared to the closing price of Oasis' Tsuruha shares revealed on December 26, 2022.

- Example of Oasis Management's activities and stock price rise towards Tsuruha Holdings

Activists' activities, not just a "rosy picture" for investors
However,It is not guaranteed that stock prices will always rise in the long term due to activists' activities.Whether or not the company accepts the activists' proposals, depending on the content of the proposals and how the company responds, it could lead to damaging the long-term corporate value, resulting in a decline in stock prices or even delisting.

- Example of an activist's shareholding in a company and the stock price trend

The stock price of Yaizu Suisan Chemical Industry in the diagram has risen by 43.83% compared to when Nanahoshi Management announced a campaign site for the company on December 22, 2022, however, the closing price on the 11th has dropped by 14.96% compared to the peak when the company was implementing a share buyback through a public tender offer aiming for delisting.
Furthermore, the stock price of Jafco Group has temporarily risen by 27.66% when the company expressed its intention to conduct a share buyback through a public tender offer, after activist shareholders revealed a 6.54% shareholding on August 9, 2022, but has since fallen by 34.71%.

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