Hong Kong-based activist hedge fund Oasis Management has set its sights on Japanese cosmetics and skincare company Kao Corporation, whose brands include Molton Brown and Curél, by urging the company to divest underperformers from its portfolio.
In a statement titled “A Better Kao”, Oasis argued that Kao can focus its resources more effectively on core segments such as cosmetics and health & beauty products, as well improving marketing through the appointment of a “leading Chief Marketing Officer”.
The hedge fund criticised Kao’s management for not fully capitalising on the its brand assets, highlighting Curél and Molton Brown, as well as Oribe, Bioré and Jergens, as having the potential to compete with Beiersdorf, L’Oréal, Estee Lauder and Procter & Gamble. According to Oasis, Kao’s marketing efforts have been lacklustre and distribution channels underutilised. As a result, Kao has lost ground to competitors in the highly competitive cosmetics industry.
Oasis also set out a target price of JPY10,000 per share, which would represent a substantial 76% increase from its current value.
Responding to Oasis in its own statement, Kao stated that the hedge fund’s criticisms “do not acknowledge the active portfolio management and structural reforms we have been successfully executing” but that the company would “continue to engage directly and constructively with Oasis and all our shareholders”.
