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Oil Refiner Cosmo Energy Struggles To Fend Off Hostile Takeover Bid

Cosmo Energy, Japan’s third-largest oil refiner, could find it difficult to gather shareholder support to block a hostile takeover bid from activist investors, Cosmo’s CEO Shigeru Yamada told Reuters in an interview published on Friday.

Cosmo Energy has been fighting an activist investor group led by Yoshiaki Murakami for a year now and has voted on a “poison pill” tactic to dilute the stake of the activist investors if their group buys more shares without complying with all the procedures or without stating the purpose of the share acquisitions. 

The activist group has 20% in Cosmo Energy, and is seeking to boost its shareholding to 24.56%.

Cosmo Energy and the activist investors have been at odds over the company’s strategy and how that strategy impacts shareholder value. Cosmo Energy’s management says the oil and gas development unit would be a core business by around 2030, while the activist investors have been pushing for selling off the oil and gas development division and consolidation of refineries.  

In June this year, Cosmo Energy’s shareholders approved a “poison pill” defense against the takeover and excluded Murakami from the vote in a controversial move.

The group of activist investors said a month later they intended to buy more shares and said it could seek a court injunction against the poison pill if it is approved only when the group is excluded from the shareholder vote.

Last month, Cosmo Energy called another shareholder vote, for December 14, with the proposal “Allotment of share options without contribution as part of the enactment of the Countermeasures based on the Response Policies to the Large-scale Purchase Actions.”

Ahead of next month’s vote, Cosmo Energy could struggle to win approval for a poison pill.

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“We are fighting against heavy odds, as we know that certain investors flatly oppose any takeover defence,” chief executive officer Shigeru Yamada told Reuters.

By Charles Kennedy for Oilprice.com

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