Palliser Capital, the UK-based activist fund led by former Elliott Management execs, has quietly amassed a ~3% stake in Japanese tyre manufacturer Toyo Tire, increasing pressure on the company to unlock value through capital returns and a possible sale, according to a report by the Financial Times.
The position, which will be formally disclosed at the Sohn Hong Kong Conference on Friday, underscores growing activist interest in Japan’s automotive sector — particularly among foreign hedge funds betting on governance reform and consolidation amid mounting EV competition.
The report cites unnamed sources familiar with Palliser’s thinking, as revealing that the hedge fund is urging Toyo to simplify its balance sheet and return up to $900m to shareholders. It is also pressing for the formation of a special committee of independent directors and advisers to evaluate strategic options — including a potential sale or going-private transaction.
Toyo, which holds a 40% share of the premium SUV and light truck tyre segment in the US, has become a standout candidate for activism given its undervaluation versus peers. Despite outperforming rivals on several profit metrics, its shares — while up 20% this year — trade at a meaningful discount. Palliser believes Toyo stock could rally to JPY4,200, from current levels around JPY2,850, if its recommendations are implemented.
Founded by activists with deep experience in corporate restructurings, Palliser has been building exposure to Japan with positions in Tokyo Tatemono and Keisei Electric Railway. The firm is known for its high-profile campaign calling for an independent and transparent review on unification of miner Rio Tinto’s dual-listing structure — a proposal that was ultimately rejected by shareholders in April.
Toyo’s situation is shaped in part by legacy issues. A 2010s-era data falsification scandal led to a more conservative financial stance, including muted guidance and under-leverage. This cautious posture has persisted, in part due to the presence of Mitsubishi Corporation, which holds a 20% stake in Toyo following its rescue investment at the time. Palliser reportedly views Mitsubishi’s ownership as a drag on valuation, though engagement with Toyo management has so far remained constructive.
Mitsubishi, for its part, said it remains committed to its holding and will continue working to enhance Toyo’s corporate value. Toyo has not yet responded publicly to Palliser’s campaign.
