Japanese gas company Iwatani to acquire 20% stake in Cosmo Energy Holdings, ending battle with activist investors

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In a strategic move to strengthen its position in the energy sector, Japanese gas company Iwatani has announced its decision to purchase a 20% stake in Cosmo Energy Holdings. The acquisition, valued at ¥105.3 billion ($710.8 million), serves as a potential white knight for Cosmo, the country’s third-largest oil refiner.

According to an exchange disclosure, Iwatani will pay ¥6,052 per share, representing an 8% premium to Cosmo’s closing price of ¥5,616 on Friday. The gas company aims to raise its stake from the current 0.07% to 19.93% through this transaction, with an additional 0.29% pending regulatory approval.

This move marks the conclusion of a high-profile battle between Cosmo and a group of activist investors led by prominent shareholder Yoshiaki Murakami. The activist group had previously signaled its intention to increase its stake in Cosmo from 20% to nearly 25%.

Iwatani, already involved with Cosmo in hydrogen-related projects and other areas, views the share acquisition as an opportunity to deepen the partnership between the two companies. A spokesperson for Iwatani emphasized that the purchase price takes into account the expected synergies arising from this collaboration.

Cosmo, whose shares have surged by 61% this year, significantly outperforming the benchmark Topix index’s 26% gain, had called for a shareholder vote on December 14. The purpose of the vote was to seek approval for a revised “poison pill” strategy aimed at blocking additional share purchases by the Murakami-led group.

While Cosmo’s CEO, Shigeru Yamada, had expressed concerns about gaining shareholder support for the takeover defense, influential proxy adviser Institutional Shareholder Services recommended that shareholders vote in favor of the poison pill this week.

Following Iwatani’s announcement, City Index Eleventh, a fund linked to Murakami, stated that it had abandoned plans to acquire more Cosmo shares. The fund expressed hope that Iwatani’s ownership would accelerate Cosmo’s efforts to increase shareholder value.

In response to the developments, Cosmo issued a separate statement, acknowledging receipt of a letter from the Murakami-linked group about its intentions. The company stated that it would carefully consider how to proceed in light of these recent events.

(Source: Nikkei Asia | Reuters | Japan Times | Deal Street Asia)

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