Activist funds defeated at Kirin, Toshiba Machine, but advance in Japan

By Ritsuko Ando and Makiko Yamazaki

TOKYO (Reuters) - Kirin Holdings <2503.T> shareholders overwhelmingly rejected on Friday an activist investor's proposal that the Japanese beverages maker exit businesses outside beer and use the sales proceeds to repurchase its shares.

London-based Independent Franchise Partners (IFP), which owns a 2% stake in Kirin, had called on the company to shed its recent investments in cosmetics and drugs, and use the proceeds to buy back shares held in its treasury worth 600 billion yen (4.52 billion pounds).

The results allow Kirin to push ahead with its strategy of expanding into areas such as biotechnology, pharmaceuticals and cosmetics in an attempt to secure longer-term growth amid a decline in global beer consumption.

Kirin CEO Yoshinori Isozaki thanked shareholders for siding with management's vision for a more diversified business.

"We will work more than ever and bolster communication with our shareholders," he told reporters.

A majority of shareholders also approved board members proposed by management, rejecting nominees recommended by IFP.

The proxy fight involving one of Japan's beloved beer brands comes as Prime Minister Shinzo Abe's push for corporate governance has emboldened those agitating for steps ranging from better allocation of capital to higher dividends.

The number of activist funds operating in Japan jumped to 36 in 2019 from seven just five years ago, according to data from IR Japan Holdings.

The proposals by IFP highlight weaknesses at Kirin, whose diversification moves so far have produced mixed results.

Analysts said that despite the vote, it was now under strong pressure to prioritise investor returns, and may be forced to agree to less radical demands ahead.

"Shareholders other than activists may not support dissidents' proposals all the way, but they may still agree on the direction, and encourage the company to agree to more moderate demands," said Fumio Matsumoto, chief strategist at Okasan Securities.

Kirin shares rose 2.2% on Friday afternoon, compared with the Nikkei index's <.N225> 2.5% gain.

In another closely watched shareholder vote, Toshiba Machine <6104.T> managed to push through controversial anti-takeover measures to fend off a hostile bid by a fund backed by veteran activist investor Yoshiaki Murakami.

But the proposal passed with the approval of just 62% of shareholders.

(Reporting by Makiko Yamazaki and Ritsuko Ando; Editing by Muralikumar Anantharaman)