TOKYO–(BUSINESS WIRE)–Mar 24, 2025–
3D Investment Partners Pte. Ltd., the asset management company of 3D OPPORTUNITY MASTER FUND (collectively referred to as “3D”), today issued an open letter to shareholders of Sapporo Holdings Limited (“Sapporo” or the “Company”) (2501.T) encouraging them to vote “FOR” the appointment of 3D’s nominee for director as a member of the audit and supervisory committee Mr. Paul Brough at the Company’s 101st Annual General Meeting of Shareholders (the “AGM”), scheduled to be held on March 28, 2025.
The full text of the letter is below:
March 24, 2025
Dear Fellow Sapporo Shareholders:
Sapporo now stands at a pivotal juncture that will irreversibly determine its future. For nearly two decades, Sapporo has suffered from mismanagement that has resulted in the Company repeatedly missing its revenue and profit targets, writing off billions in M&A investments and operating with worst-in-class margins and returns on equity. Now, Sapporo faces a series of significant decisions that will have an irreversible impact on the Company’s medium- to long-term corporate value in order to break free from such a situation.
Sapporo is in the process of divesting most of its real estate. We expect the proceeds from this effort to be equal to at least 70% of the Company’s current market capitalization. The Company has indicated that it intends to invest a significant portion of the proceeds in the core Alcoholic Beverages business to drive growth investments, including through large-scale M&A. However, all of Sapporo’s major acquisitions of overseas breweries have resulted in large impairment losses. In the aggregate, Sapporo has incurred losses in corporate value amounting to nearly JPY 40 billion with overseas M&A.
Sapporo’s Board Lacks Independence, Expertise andCapitalDiscipline
We are deeply concerned that, without the enhanced oversight and capital allocation discipline of Sapporo’s Board, Sapporo is doomed to repeat the failures of the past, and the failures to maximize the real estate divestiture proceeds and reallocate the proceeds will further and irreversibly impair corporate value.
We believe Sapporo’s Board, as presently configured, lacks the independence, expertise and capital discipline required to maximize the sale price of the Company’s real estate assets and to appropriately reinvest the proceeds to optimize returns. In our view, the audit and supervisory committee is particularly deficient. Notably, the current chair of the committee is a former Sapporo Breweries executive director who was directly involved in the failed acquisitions that led to considerable impairment losses. He lacks financial and accounting acumen, has no experience in real estate or selling assets, and has never overseen capital allocation. The other members of the committee also lack the expertise required to perform the holistic business and operational audits that directly impact corporate value.
Mr. Paul Brough is a Highly-Qualified, Independent Director Candidate
To enhance the independence and strengthen the Board’s oversight, we have proposed appointing Mr. Brough as a director as a member of the audit and supervisory committee. We believe Mr. Brough would make an outstanding director candidate for several reasons:
- Mr. Brough is well-versed in M&A, capital allocation, shareholder engagement and corporate governance. He has been involved as an advisor and as a director in many restructurings, strategic review processes, asset sales, acquisitions, take-private transactions and real estate businesses and, in our estimation, has more experience in these areas than any of Sapporo’s incumbent directors.
- Mr. Brough has a proven track record of working collaboratively with directors in complex, high-profile and sensitive situations, including at companies like Toshiba during its strategic review process, Noble Group Holdings during its restructuring, and Guoco Group, a company specializing in real estate development and transactions in Asia.
- Mr. Brough has no business dealings with Sapporo and meets the independence criteria of both the Tokyo Stock Exchange and Sapporo.
Both ISS and Glass Lewis agree that changes of the board are necessary
Notably, both leading independent proxy advisory firms, Institutional Shareholder Services (“ISS”) and Glass, Lewis & Co. (“Glass Lewis”), agree that changes to Sapporo’s Board are warranted. Both of these independent research firms support Mr. Brough’s appointment as a director as a member of the audit and supervisory committee.
- ISS concluded that “board change is warranted,” given the Company’s “poor track record in capital allocation, the intention to reallocate [a] substantial amount of the proceeds from the sale of real estate to the underperforming alcoholic beverages business, coupled with unproven board oversight” and noted that Mr. Brough, “would bring necessary strategic review, restructuring and public board experience” and is therefore best positioned to effect the necessary change at Sapporo.
- Glass Lewis determined that “credible concerns regarding [Sapporo]’s historical performance and strategic execution – including with respect to critical M&A and capital allocation efforts – as well as a raft of continuing governance concerns” provide “compelling cause for investors to support [3D]’s resolutions.” Glass Lewis considers Mr. Brough to be an “independent candidate with relevant expertise” who “represent[s] a strong and decidedly low-risk addition to [Sapporo’s] board.”
Both ISS and Glass Lewis have concerns about the suitability of Mr. Makio Tanehashi as a director
Also, ISS and Glass Lewis also expressed concerns about Mr. Makio Tanehashi’s substantial independence from executive management and questioned his suitability.
- ISS recommended that shareholders vote “AGAINST” the re-election of Mr. Makio Tanehashi, concluding that “his prior links to the company, coupled with questionable board oversight and the open questions surrounding the status of the pending real estate review, suggest that he has not been an effective voice to date or a representative who shareholders can rely on to push for necessary reform moving forward.”
- Glass Lewis questioned whether Mr. Tanehashi is “well-suited to offer unambiguously independent oversight,” noting that he is “affiliated as an extension of Sapporo’s legacy cross-shareholding dynamics.”
A Call to Our Fellow Shareholders
As Sapporo’s largest shareholder, we are deeply committed to enhancing Sapporo’s Board oversight and corporate value. For nearly three years, we have engaged in dialogue with the Board and management towards these objectives. We believe our engagement efforts have had a meaningfully positive impact, to the benefit of all shareholders.
But our work is not yet done. With the real estate divestiture pending and the future reallocation of capital on the horizon, Sapporo’s Board faces critical and possibly irreversible decisions. At this week’s Annual General Meeting, Sapporo’s shareholders have the opportunity to enhance the Board’s and the audit and supervisory committee’s composition and ensure that they are equipped to execute on this important process in a manner that maximizes corporate value.
We call upon our fellow shareholders to support our proposal to appoint Mr. Brough as a director as a member of the audit and supervisory committee (Proposal Nos. 4 and 5) , and vote AGAINST the re-election of Mr. Tanehashi as a director (Proposal No. 2-Candidate Number 6) at the Company’s upcoming AGM.
The time to vote is now. Whether you are voting by mail or the Internet, your vote must be received or registered by no later than 5:30 p.m. on Thursday, March 27, 2025 (JST).
Thank you for your support.
Sincerely,
3D Investment Partners Pte. Ltd.
Note: The passages in quotation marks (“”) are direct quotes excerpted by 3D from the ISS and Glass Lewis reports. The portions in brackets ([]) have been added by 3D for additional clarity/context. Permission to use these quotes from ISS and Glass Lewis was neither explicitly sought nor obtained.
About 3D Investment Partners Pte. Ltd.
3D Investment Partners Pte. Ltd. is an independent Singapore-based Japan focused value investing fund manager founded in 2015. 3D Investment Partners Pte. Ltd. focuses on partnering with managements who share its investment philosophy of medium- to long-term value creation through compound capital growth and a common objective of achieving long-term returns.
Disclaimer
This press release is provided for informational purposes only and does not constitute an offer to purchase or sell any security or investment product, nor does it constitute professional or investment advice. This press release should not be relied on by any person for any purpose and is not, and should not be construed as investment, financial, legal, tax or other advice.
3D Investment Partners Pte. Ltd. and its affiliates and their related persons (“3DIP”) believe that the current market price of Sapporo does not reflect its intrinsic value. 3DIP acquired beneficially and/or economic interests based on its own idea that Sapporo securities have been undervalued and provides attractive investment opportunity and may in the future beneficially own and/or have an economic interest in, Sapporo securities. 3DIP intends to review its investments in Sapporo on a continuing basis and, depending upon various factors including, without limitation, Sapporo’s financial position and strategic direction, the outcome of any discussions with Sapporo, overall market conditions, other investment opportunities available to 3DIP, and the availability of Sapporo securities at prices that would make the purchase or sale of Sapporo securities desirable, 3DIP may, from time to time (in the open market or in private transactions), buy, sell, cover, hedge, or otherwise change the form or substance of any of its investments (including the investment in Sapporo securities) to any degree in any manner permitted by any applicable law, and expressly disclaims any obligation to notify others of any such changes.
3DIP provides no representation or warranty, either expressed or implied, in relation to the accuracy, completeness, or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets, or developments referred to herein. 3DIP expressly disclaims any responsibility or liability for any loss howsoever arising from any use of, or reliance on, this press release or its contents as a whole or in part by any person, or otherwise howsoever arising in connection with this press release. 3DIP hereby expressly disclaims any obligation to update or provide additional information regarding the contents of this press release or to correct any inaccuracies in the information contained in this press release.
3DIP disclaims any intention or agreement to be treated as a joint holder (kyodo hoyu sha) under the Financial Instruments and Exchange Act of Japan, a closely related party (missetsu kankei sha) under the Foreign Exchange and Foreign Trade Act with other shareholders, or receiving any power or permission to represent other shareholders in relation to the exercise of their voting rights, and has no intention to solicit, encourage, induce or require any person to cause other shareholders to represent such voting rights.
3DIP does not have the intention to make a proposal, directly or through other shareholders of Sapporo, to transfer or abolish the business or assets of Sapporo and/or Sapporo group companies at the general shareholders meeting of Sapporo. 3DIP does not have the intention and purpose to engage in any conduct which constricts the continuing and stable implementation of business of Sapporo and/or Sapporo Holdings group companies.
This press release may include content or quotes from news coverage or other third-party public sources (“Third-Party Materials”). Permission to quote from Third-Party Materials in this press release may neither have been sought nor obtained. The content of the Third-Party Materials has not been independently verified by 3DIP and does not necessarily represent the views of 3DIP. The authors and/or publishers of the Third-Party Materials are independent of, and may have different views to 3DIP. The quoting Third-Party Materials in this press release does not imply that 3DIP endorses or concurs with any part of the content of the Third-Party Materials or that any of the authors or publishers of the Third-Party Materials endorses or concurs with any views which have been expressed by 3DIP on the relevant subject matter. The Third-Party Materials may not be representative of all relevant news coverage or views expressed by other third parties on the stated issues.
In respect of information that has been prepared by 3DIP (and not otherwise attributed to any other party) and which appear in the English language version of this press release, in the event of any inconsistency between the English language version and the Japanese language version of this press release, the meaning of the Japanese language version shall prevail unless otherwise expressly indicated.
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SOURCE: 3D Investment Partners Pte. Ltd.
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PUB: 03/24/2025 04:00 AM/DISC: 03/24/2025 04:00 AM
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