ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconIcon FacebookIcon LinkedinShapeCreated with Sketch.Icon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Business

Proxy fight may loom as Wuthelam seeks changes to Nippon Paint's board

Japanese group weighing options in response to Singaporean partner's proposal

Nippon Paint Holdings has expanded its Chinese operations to tap strong demand for its inorganic building paint.

TOKYO -- Singaporean coatings group Wuthelam is seeking to name a majority on Nippon Paint Holdings' board in the belief that it can create more value for investors in the Japanese company.

Osaka-based Nippon Paint would expand its board from seven to 10 seats under a shareholder proposal submitted Friday, with Wuthelam having the right to name six independent directors.

"We don't seek a frivolous confrontation with management, but shareholder value could be maximized if we were able to choose six [directors]," Wuthelam executive Goh Hup Jin told The Nikkei.

Wuthelam is Nippon Paint's top shareholder, with a 39% stake but only Goh representing it on the board. The six nominees include Goh, former Jasdaq Securities Exchange President Takashi Tsutsui and Yaskawa Information Systems President Toshio Morohoshi.

Nippon Paint enjoys a commanding share in China and aims to boost construction paint sales in North America, where it has a thin presence. Wuthelam intends to increase its scrutiny of this strategy.

Wuthelam's close ties with Nippon Paint date back to the 1960s, with joint-venture operations in Southeast Asia. But the Singaporean group ran into resistance in 2013 when it tried to take a larger stake in Nippon Paint. A compromise was later reached where Nippon Paint turned eight joint ventures into subsidiaries in exchange for Wuthelam increasing its stake in the Japanese parent.

Now Goh is pushing harder for boosting shareholder value. Late last year, Nippon Paint abandoned late-stage talks to acquire Axalta Coating Systems of the U.S. for more than 1 trillion yen ($9.04 billion).

"That was a good decision," Goh said.

As for Wuthelam's proposal, Nippon Paint told The Nikkei that the company will review its options. Nippon Paint has yet to publicly name any candidates for the board. If the company proposes a slate conflicting with Wuthelam's picks, it could spark a proxy battle at the annual shareholders meeting this March.

Singapore billionaire Goh Cheng Liang's Wuthelam and other non-Japanese holders owned 58% of Nippon Paint as of June 2017. Japanese banks and insurers make up most of the rest of the top 10 shareholders.

Normally, 100% of voting rights do not get exercised in shareholder decisions. Wuthelam could get its proposal to pass by persuading other shareholders totaling less than 10% of voting rights to side with it.

(Nikkei)

Get unique insights on Asia, the most dynamic market in the world.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media