Orbis Supports ISS Recommendation for Tsuruha Shareholders to Vote Against Welcia Merger

Orbis Investments (“Orbis”), which held 9.7% of Tsuruha Holdings Inc. (“Tsuruha”) as of 28 February 2025 on behalf of its clients, today expressed strong support for the recommendation by Institutional Shareholder Services Inc. (“ISS”) that Tsuruha shareholders vote AGAINST the proposed merger with Welcia Holdings Co., Ltd. (“Welcia”), a company controlled by AEON Co., Ltd. (“AEON”).

Orbis reaffirmed its previously stated opposition—outlined in its public statement of 12 April 2025—to the proposed merger, which forms part of a series of transactions that, if completed, would ultimately hand AEON control of Tsuruha without fair compensation for Tsuruha’s minority shareholders and without the opportunity for shareholders to exit by way of a cash offer.

“The proposed transaction would be a remarkably poor outcome for Tsuruha shareholders,” said Brett Moshal, co-head of the Japan investment team at Orbis. “We are supportive of industry consolidation in principle. However, such transactions must be conducted through a fair and transparent process, and on equitable terms. This one fails on both counts.”

AEON plans to gain control of Tsuruha through a series of steps ending with a tender offer at ¥11,400 per share—nearly 27% below the ¥15,500 per share AEON paid to acquire a 13% stake from Oasis Asset Management in March 2024. Orbis believes that the merger and tender offer severely undervalue Tsuruha and would ultimately expose its shareholders to significant risks as minorities in a listed AEON subsidiary.

Orbis maintains that any change-of-control transaction should be conducted via an all-cash offer to Tsuruha’s shareholders at more than the ¥15,500 per share AEON paid to Oasis Asset Management last year, to reflect a reasonable control premium. The company’s board of directors should conduct a market check, actively solicit competing proposals that might deliver greater value, and provide transparency by disclosing their findings to shareholders.

Having invested in Japanese companies for over three decades and as a 25-year shareholder of Tsuruha, Orbis is deeply committed to supporting Japan’s corporate governance reform efforts. However, this group of transactions represents a material setback.

Orbis therefore urges Tsuruha shareholders to vote AGAINST the proposed merger at the upcoming 26 May 2025 Annual General Meeting. The merger requires a two-thirds majority, and is the only opportunity for Tsuruha shareholders to vote on one of the series of transactions that would hand control of Tsuruha to AEON at a steep discount to fair value.

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