Hong Kong’s Oasis sues NEC over JAE sale

Oasis Management, a hedge fund in Hong Kong, filed an injunction to stop NEC from selling its shares in its public subsidiary, Japan Aviation Electronics (JAE), saying the sale would harm its shareholders, Reuters reported on Monday.

Oasis claimed in a legal action submitted to the Tokyo District Court on February. 20 that NEC’s board of directors violated their fiduciary duty to shareholders by missing an opportunity to sell JAE shares at a higher price, causing measurable losses to NEC shareholders, adding that it has owned more than 3 million NEC shares since 2020.

Reuters reported that NEC had gotten multiple buyout bids from global private equity funds for JAE before deciding to sell most of its 51 per cent stake to the unit at a lower price through a tender offer.

Sources told Reuters that at least three global funds had told both JAE and NEC that they were ready to pay high premiums to buy the electronics component maker.
JAE’s tender offer, which lasts from January. 30 to February. 28, sets the price at 14 per cent lower than the 3,040 yen closing before the announcement.

Oasis said in its statement to the court that it had offered to buy NEC’s shares in JAE for 3,000 yen per share on January. 30.

Curi RMB Capital, an investor based in Chicago, also urged NEC and JAE to cancel their buyback deals and think about other buyout offers they had.

The fund said it would ask for the companies’ board minutes with the court’s permission to check their decision-making process and “pursue appropriate recourse against the board on behalf of shareholders.”