Hedge Fund Oasis Seen Blocked by Elliott on Alps-Alpine Deal

(Bloomberg) -- Oasis Management Co. may be set to lose its battle to block a Japanese takeover after another hedge fund, Elliott Management Corp., showed signs that it may support the deal.

Alps Electric Co.’s planned acquisition of Alpine Electronics Inc., the most closely watched corporate governance standoff in Japan this year, will come down to an investor vote on Dec. 5. Oasis owns 9.9 percent of Alpine and opposes the takeover; Elliott, which also holds about 10 percent, has declined to comment on its intentions.

But Elliott’s actions last week were a clue, says Justin Tang, the Singapore-based head of Asian research at special-situations house United First Partners. Elliott published a statement saying it welcomed Alps’s announcement of a post-merger plan to buy back 40 billion yen ($353 million) in shares. To Tang, that suggests the activist fund will vote for the deal.

Elliott is “driving the bus on this one," Tang said in an interview. "Given Elliott’s stake and its public commendation of Alps’s 40 billion yen share buyback post the merger, the vote will likely go through."

Two-thirds of Alpine’s shareholders need to approve the deal. Alps’s 40 percent ownership of Alpine, combined with Elliott’s stake, would mean 50 percent of votes are already decided in its favor. Alpine shares slid 4 percent on Tuesday, while Alps lost 2.2 percent.

Bad for Japan

“While we won’t comment on any specific shareholder, we believe that any investor who understands these issues and votes in favor of the transaction is voting directly against good corporate governance, which is bad for Japan,” Oasis said in an emailed statement. “In this case, Alps shareholders, like Alps itself, have an interest in transferring value belonging to Alpine minority shareholders directly to Alps at a substantial discount.”

The hedge fund run by Seth Fischer has called on Alpine shareholders to reject the Alps offer, which it says is “shockingly low.” It has questioned the methods used to reach the valuation for the deal.

Alps said last week it would do the buyback to ease concerns about the planned merger. Alps’s shares jumped 4.6 percent on the news. Elliott separately holds an 11.2 percent stake in Alps, according to a filing dated early October.

‘Innovative’ Approach

“Elliott welcomes the announcement by Alps of enhanced parameters for its shareholder-returns program," the New York-based fund said in a statement last week. "We commend Alps’s management on this innovative shareholder-value-driven approach to increasing returns for all stakeholders in the merged Alps/Alpine business.”

Oasis, which has been a vocal champion of shareholder rights in Japan, has been vigorously campaigning against the deal, saying it is ripping off Alpine’s minority stock owners. The fund created a website and held an investor day in Tokyo to persuade Alpine shareholders to denounce it.

Proxy advisers are divided on the transaction. Institutional Shareholders Services has recommended that Alpine stock holders vote against it, while Glass Lewis said shareholders should approve the deal.

To contact the reporters on this story: Min Jeong Lee in Tokyo at mlee754@bloomberg.net;Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Tom Redmond

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