Oasis Management Company, the Hong Kong-based activist hedge fund firm led by Seth Fischer, has outlined three potential strategies aimed at boosting shareholder value at Kobayashi Pharmaceutical amid ongoing troubles at the pharmaceutical and consumer products company, according to a report by CNBC.
Earlier this year, Kobayashi faced a major setback when reports emerged linking health issues to its red koji-related products. This led to a product recall in March and a subsequent investigation that revealed inadequate safety protocols and insufficient quality control.
As a result, the company’s stock fell nearly 20% from the end of 2023.
In response, Oasis Management, which holds a 5.20% stake in Kobayashi, has put forward three recommendations for creating shareholder value: Kobayashi could enhance its operational performance independently; the company could consider going private through a management buyout; or Kobayashi could partner with Oasis to address operational inefficiencies, strengthen corporate governance, and revamp its board structure.
Despite the recent resignation of President and CEO Akihiro Kobayashi and Chairman Kazumasa Kobayashi, with the pair having been replaced by Executive Officer and Head of Sustainability Management Satoshi Yamane, both have remained with the company in advisory roles.
The recent leadership changes are seen as positive steps, yet the continued involvement of the former executives raises concerns about the board’s commitment to genuine reform.
Oasis has a notable track record in international activism, particularly in Asia, although Japanese companies are often resistant to investors pushing for governance reforms.
If it succeeds in obtaining a board seat, it could play a crucial role in exploring strategic alternatives for Kobayashi, including a potential management buyout at the company’s current depressed share price, or an acquisition by a strategic buyer.
