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AVI urges investee Wacom to make governance changes
(Sharecast News) - Asset Value Investors (AVI), the investment manager behind FTSE 250-listed AVI Global Trust, launched a public campaign on Wednesday calling on Wacom Corporation to implement governance and strategic changes aimed at improving long-term corporate value. The campaign followed what AVI described as sustained underperformance and value erosion in Wacom's branded business segment.
AVI, which has been a shareholder in Wacom since August 2021 and was now its largest shareholder through holdings in AGT and other funds, submitted shareholder proposals ahead of the Japanese interface hardware company's upcoming annual general meeting in June.
The proposals included the establishment of a transformation plan supervisory committee, the appointment of an outside director with capital markets experience, and amendments to Wacom's articles of incorporation to strengthen its response to acquisition proposals, in line with Japan's Ministry of Economy, Trade and Industry guidelines.
AVI said Wacom's branded business had accumulated over JPY 10bn (£52.29m) in losses since the fourth quarter of the 2022 financial year, and had failed to meet its mid-term targets, significantly underperforming the Topix index.
It said it had previously sought to engage with Wacom privately, but was now going public due to a lack of satisfactory progress.
"To improve alignment with investor expectations and shareholder interests, Wacom should go beyond the current board's monitoring role by appointing directors with capital market experience, establishing a supervisory committee, and amending the articles of incorporation to align with METI's Guidelines for Corporate Takeovers," said AVI Japan head of research Kazunari Sakai.
"Although the branded business segment continues to face challenges, we are confident that through shortening the product development cycle for entry-level products and strengthening e-commerce channels, Wacom can further reinforce its position as the global leader."
At 1136 BST, shares in AVI Global Trust were up 0.23% at 229.54p.
Reporting by Josh White for Sharecast.com.
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