Visitors in front of the Cinderella Castle at Tokyo Disneyland in Tokyo, Japan on Jan. 17, 2023.
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Shares of Mitsui Fudosan surged to an all-time high on Monday after a report said U.S. activist investment firm Elliott Management had demanded the company launch a massive stock buyback program.
Japan’s largest property developer jumped as much as 11.8% in early afternoon trading to hit a record 4,100 yen.
The Financial Times reported that Elliott Management had called upon the property group to launch a 1 trillion yen ($6.74 billion) buyback plan.
The report said Elliott also demanded the company sell down its $3.6 billion stake in Oriental Land, which runs Tokyo Disneyland, citing people familiar with the matter at both Elliott and Mitsui.
“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,” said Jesper Koll, expert director at Monex Group told CNBC.
Koll said Mitsui Fudosan’s ownership of Oriental Land makes “little sense,” and that proceeds from a sell-down demanded by Elliott can be used more efficiently.
“Whether the proceeds of a sell-down should be used for a share buyback (as Elliot demands), or whether Mitsui’s leadership team should become a more aggressive investor in for-future-growth projects is the real question,” Koll said.
Shares of Oriental Land fell 2.2% following the news. Mitsui currently owns a 5.4% stake in Oriental Land, according to LSEG data, making it Oriental’s second largest stakeholder.
As off September 2023, Oriental Land was Mitsui’s largest holding, making up 61.2% of its portfolio, according to LSEG data.
Data from LSEG showed the company has sold off 16.6% of its stake in Oriental Land in the last six months.
