By Makiko Yamazaki
TOKYO, Sept 18 (Reuters) – A Tokyo court blocked on Friday drug wholesaler Toho Holdings’ takeover defence against an activist shareholder, in a closely watched case as Japanese companies increasingly turn to ‘poison pill’ strategies against activist investors.
The Tokyo District Court granted an injunction to Singapore-based hedge fund 3D Investment Partners, Toho’s largest shareholder, blocking the issue of warrants that would dilute the fund’s stake if it raised its holding above 24%.
Toho plans to file petition to object to the court’s injunction, the company said in a filing with the Tokyo bourse.
Reuters could not get immediate comment from 3D.
The case tested whether companies can deploy poison pills, a discriminatory warrant issuance designed to dilute a targeted shareholder’s stake, against activist investors seeking to raise their stakes without pursuing outright control.
The decision could raise hurdles to such measures, as companies increasingly resort to them to curb activists’ influence amid a surge in shareholder activism in Japan.
Critics say extending poison pills beyond their original purpose of giving shareholders time and information to assess hostile takeover proposals risks entrenching management and undermining efforts to improve corporate governance.
3D has sought to raise its stake to 27%, a holding Toho said could give it significant influence over management and potentially let it pressure the company to prioritise short-term gains.
Previous court decisions have treated shareholder approval as a factor supporting the legitimacy of takeover defences.
Toho’s measure received 54.7% shareholder backing at its annual general meeting in June, clearing the threshold required for its activation.
(Reporting by Makiko Yamazaki; Editing by Jan Harvey and Clarence Fernandez)
