AVI Calls On Rohto To Prioritise Core Business, Improve Shareholder Engagement
KUALA LUMPUR, April 9 (Bernama) -- Asset Value Investors Limited (AVI) has launched a campaign calling for Rohto Pharmaceutical (Rohto) to refocus its successful core businesses, such as skincare and eye care, and abandon its ongoing investments in the unprofitable regenerative medicine sector.
According to a statement, AVI also calls for Rohto to engage more constructively with shareholders in line with the Tokyo Stock Exchange’s (TSE) request for management to be conscious of capital costs and stock prices.
AVI Chief Executive Officer and Chief Investment Officer, Joe Bauernfreund stated that Rohto remains undervalued compared to its peers and that AVI’s attempts to engage with management on focusing resources on profitable areas like skincare and eye care have not been successful, prompting the company to take its campaign public.
Meanwhile, AVI Japan Head of Research, Kazunari Sakai emphasised that Rohto’s core businesses hold significant value but that its ongoing investment in regenerative medicine is hindering the company's potential.
Sakai added that AVI believes that by shifting focus and aligning management with shareholder interests, Rohto can unlock its full valuation potential and address the TSE's call for cost-conscious management.
AVI, which began investing in Rohto in June 2024, has made multiple attempts to engage with the company, including sending letters and presentations to discuss ways to improve long-term corporate value.
However, AVI expresses concern over Rohto’s continued investments in the regenerative medicine sector, which lacks a clear path to success, as well as the company’s high-priced mergers and acquisitions (M&A) deals and issuance of potentially dilutive convertible bonds despite a low stock price.
Despite repeated efforts to engage with Rohto’s board, AVI has only met with one board member, citing scheduling issues. AVI argues that this lack of engagement is contrary to the TSE's request for companies to be more responsive to shareholder concerns.
-- BERNAMA