Mitsui Fudosan’s stocks soared to unprecedented levels on Monday following reports of a demand from U.S. activist investment firm Elliott Managem initiate a substantial stock buyback program.ent for the company to Japan’s leading property developer saw a surge of up to 11.8% in early afternoon trading, reaching a historic high of 4,100 yen.
According to the Financial Times, Elliott Management urged the property group to initiate a buyback plan totaling 1 trillion yen ($6.74 billion). The report also stated that Elliott demanded the company to reduce its $3.6 billion stake in Oriental Land, which operates Tokyo Disneyland, as per sources familiar with the matter at both Elliott and Mitsui.
Jesper Koll, an expert director at Monex Group, commented on the situation, stating, “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,” as reported by the sources.
Koll expressed that Mitsui Fudosan‘s ownership of Oriental Land appears to have limited benefits and that the proceeds from a sell-down, as demanded by Elliott, could be allocated more effectively.
“The key question lies in how the proceeds from the sell-down should be utilized. Whether they should be directed towards a share buyback, as demanded by Elliott, or if Mitsui’s leadership team should adopt a more assertive stance as investors in future growth projects,” Koll stated.
Following the news, shares of Oriental Land declined by 2.2%. According to LSEG data, Mitsui currently holds a 5.4% stake in Oriental Land, making it the company’s second-largest stakeholder.
As of September 2023, Oriental Land constituted Mitsui’s largest holding, accounting for 61.2% of its portfolio, as per LSEG data. Furthermore, data from LSEG indicated that the company has divested 16.6% of its stake in Oriental Land over the past six months.
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