Activist Oasis suggests three steps to build shareholder value at embattled Kobayashi Pharmaceutical

What’s happening:

Oasis Management, a global hedge fund management firm, has recently reported a 5.20% stake in Kobayashi Pharmaceutical. Oasis has stated that it may engage with the company in light of a scandal surrounding Kobayashi’s red koji-related products. They have suggested three paths for value creation, including improving operational performance, going private via a management buyout, or working with Oasis to enhance operational performance, corporate governance, and the board’s composition.

Behind the scenes:

Kobayashi Pharmaceutical is a Japan-based company that manufactures and sells pharmaceuticals and consumer products. The company owns a range of brands across various categories and generates the majority of its sales domestically. However, the company has seen a decline in financial performance over the years, with lower returns on assets, equity, and margins. Additionally, a scandal related to its red koji-related products has caused the company’s stock to decrease by nearly 20%.

Earlier this year, the president and CEO, as well as the chairman of Kobayashi, resigned from their positions. The company’s newly appointed CEO has taken over, but it is uncertain how the management will respond to Oasis Management’s involvement. Oasis has a track record of successful activism, primarily in Asia, and has suggested that Kobayashi should overhaul its board and consider inviting a representative from Oasis to improve corporate governance and shareholder value.

Oasis’s involvement could lead to the assessment of strategic alternatives, such as a management buyout or acquisition by a strategic acquirer. The firm has been active in the Japanese pharmaceutical industry and has advocated for change in other companies in the sector.

Disclaimer:

This article is a summarized and anonymized version of the original news article.