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.