U.S. activist fund Dalton Investments has proposed taking Japanese broadcaster Fuji Media Holdings private through a management buyout, as detailed in a letter sent to the company on Thursday. Following the announcement, Fuji Media shares surged 9.8% to reach 1,808 yen, a two-week high.
Dalton’s proposal envisions holding a 20% stake in Fuji Media, with the remainder allocated to private equity funds, managers, employees, and other investors. The media company would subsequently be delisted, allowing for a comprehensive restructuring aimed at enhancing its value through asset sales.
In the proposal, Dalton recommended Fuji Media focus on its core content and broadcast business while raising funds for the buyout by securitizing real estate assets and selling cross-held shares. Dalton has been advocating for Fuji Media to improve its capital efficiency, noting that the company’s price-to-book ratio hovers around 0.4x.
A Fuji Media representative declined to comment on the company’s response to the proposal when contacted by Nikkei.
Under Japanese law, foreign ownership of a broadcaster is capped at 20%. Dalton, in conjunction with its affiliates, including the London-listed Nippon Active Value Fund, currently owns 6.55% of Fuji Media.
Dalton’s letter also emphasized the need for improved corporate governance at Fuji Media. The activist fund plans to urge shareholders at the forthcoming Annual General Meeting in late June to vote against the re-election of the entire slate of “inside” directors, criticizing the high average age of the board members.
Founded in 1999, Dalton Investments is a prominent activist fund with a significant focus on Japanese equities. As of the end of March, the firm managed $4.4 billion in assets, with a portfolio that includes investments in around 80 Japanese companies.
Dalton’s move marks a significant step in its ongoing efforts to drive change within Fuji Media, aiming to unlock greater value for shareholders and enhance the company’s strategic focus in the competitive broadcasting industry.
