Shares of Mitsui Fudosan surged to an all-time high on Monday after a report said U.S. activist investment firm Elliott Management had demanded the company launch a massive stock buyback program.
Japan’s largest property developer jumped as much as 11.8% in early afternoon trading to hit a record 4,100 yen.
The Financial Times reported that Elliott Management had called upon the property group to launch a 1 trillion yen ($6.74 billion) buyback plan.
The report said Elliott also demanded the company sell down its $3.6 billion stake in Oriental Land, which runs Tokyo Disneyland, citing people familiar with the matter at both Elliott and Mitsui.
“The pressure on corporate Japan is now relentless — lazy balance sheets will no longer be tolerated. Even previously untouchable elite companies — Mitsui Fudosan is the undisputed leader in both local and global Japan-led real estate development — are now targeted,” said Jesper Koll, expert director at Monex Group told CNBC.
Visitors in front of the Cinderella Castle at Tokyo Disneyland in Tokyo, Japan on Jan. 17, 2023.
Bloomberg | Bloomberg | Getty Images
Koll said Mitsui Fudosan’s ownership of Oriental Land makes “little sense,” and that proceeds from a sell-down demanded by Elliott can be used more efficiently.
“Whether the proceeds of a sell-down should be used for a share buyback (as Elliot demands), or whether Mitsui’s leadership team should become a more aggressive investor in for-future-growth projects is the real question,” Koll said.
Shares of Oriental Land fell 2.2% following the news. Mitsui currently owns a 5.4% stake in Oriental Land, according to LSEG data, making it Oriental’s second largest stakeholder.
As off September 2023, Oriental Land was Mitsui’s largest holding, making up 61.2% of its portfolio, according to LSEG data.
Data from LSEG showed the company has sold off 16.6% of its stake in Oriental Land in the last six months.
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