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Alpine Shareholders deserve a FAIR DEAL

Hitachi’s sale of Clarion proves what the fair price is for Alpine.

It is at least 2.5x what Alps want to pay you.

Do Not Vote for the Merger!

As at October 30, Alps is trying to buy your stake in Alpine at LESS than JPY1,700! That is less than Alpine’s stock price before the deal was announced and before it revised up its earnings three times!

Alpine continues to beat its earnings forecasts and yet is trying to force minorities to accept a lower and lower offer from Alps

Alps and Alpine’s management are working together against Alpine’s minority shareholders

Don’t let them get away with it

The Clarion deal proves that your stake in Alpine is worth at least 2.5x what Alps wants to pay you


On Oct. 26, Faurecia announced it will tender for 100% of Clarion at a valuation of 11.2x EV/EBITDA. That implies a price of JPY4,731 per share for Alpine, more than 2.5x the amount Alps is offering. The Clarion deal is a real-world example and true reflection of the fair value that should be applied to Alpine.

The Clarion deal is a watershed moment in this long saga. It proves what a true third-party buyer is willing to pay for Alpine in this period of transformation and the growing importance of infotainment hardware and software.

  • The valuations used in the Clarion transaction are a better indication than stock market prices, which only indicate what minority, small and non-controlling stakes are transacted at

  • They are better than discounted cash flow analyses, which are highly sensitive to theoretical assumptions and figures (let alone ones which include highly questionable figures and assumptions!)

Implication of the Clarion deal

The Alps offer is well below every single one of the Clarion-deal implied multiples. This shows just how low the offer for Alpine is:

If Alpine insists on a merger with Alps, then we must demand a higher price for minority shareholders.

Based on the Clarion deal, Alpine’s shares are worth between JPY4,731 and JPY12,061 per share:

There are alternatives to a merger with Alps

If Alps refuses to change the price, Alpine should cancel the merger. Alps is not the only option out there, and Alpine must not be held to ransom when it has so many other excellent opportunities at hand.

Alps’ current offer values Alpine as a bankrupt company with no future. This could not be further from the truth!

Alps’ offer is so low that there is no downside or risk to rejecting the merger. In fact, we believe that Alpine’s stock price will increase if the deal is rejected.

The acquisition of Clarion should prompt Alpine’s management to look at alternative partners who will add more value than Alps. Partners such as Faurecia, one of the largest Tier 1 auto suppliers, would help expand Alpine’s reach.

We call on Alpine’s management to postpone the EGM and work with minority shareholders to pursue alternative partners to Alps that would offer more attractive growth opportunities for Alpine and a higher valuation for minority shareholders.

If Alps truly values Alpine at such a discount to its fair value, then it should be more than willing to “go shop” Alpine to alternative buyers and generate far more cash for themselves – a win-win for everyone.


Get your shares registered to vote!

If you have a custodian or prime broker, confirm you can vote your shares!

Alps is taking advantage of minority shareholders and buying Alpine at too cheap a price, by every metric



The current merger price dramatically undervalues Alpine. But the merger at these proposed terms can be stopped and, we believe, will be stopped.

Only one-third of Alpine shareholders need to vote against the merger at the December 2018 EGM to stop it and there are more than enough dissenting shareholders to achieve this:

–          At the most recent AGM, almost 30% of shareholders voted against Alpine’s management and in favor of the Oasis proposals – these are tacit votes against the merger  

–          There has been a significant increase in the number of dissenting shareholders acquiring additional stakes in Alpine following the AGM

–          We believe that over 42% of Alpine’s shareholders will vote against the deal at the current at the current valuation

What can you do to help protect Alpine?

a.       Speak to your broker and/or custodian to register your shares in your own name before record date to ensure that you can vote at the EGM

b.       Send a letter to Alpine informing them of size of your shareholding, your opposition to the merger at the current valuation and, if possible, your fair value of Alpine

What is a fair price?

We asked two independent valuation experts, BVCJ and Zecoo Partners, to calculate a fair value range.

–          Zecoo Partners’ lowest valuation of Alpine was JPY3,774 per share

–          The BVCJ valuation as at November 1, 2017, prior to the final revision and higher earnings was between JPY3,965 and JPY6,734 per share

What can you do about it?

It is now time for Alpine’s minority shareholders to stand up to Alpine and Alps and demand a fair deal. We recommend the following:

  1. Send letters to Alpine and Alps telling them of your dissatisfaction with the offer price.

  2. Sign up for the latest updates from Oasis below to help stay informed.

  3. Attend the Alpine Investors’ Day Sponsored by Oasis on Nov. 7 in Tokyo to learn more.

  4. Attend the Alpine EGM in mid-December 2018 – ensure now through your broker or custodian that you own the shares in your own name so that you can attend the AGM.

  5. Talk to us. What do you think? We want to hear from you. We are reachable at protectalpine@oasiscm.com

       Sign up here for the latest updates:


Alpine’s Third-party Committee, which rubber-stamped this unfair merger, stated in its Share Exchange Agreement announcement on July 27, 2017:

 “The Third-party Committee considered that the resolution of the board of directors of Alpine for the Share Exchange was not disadvantageous to the minority shareholders of Alpine…”

However, Alpine’s current share price is JPY2,558 per share and is trading at a premium of 17% to the current SER value of JPY2,183 per share. Minority shareholders will lose 15% of their money if the merger goes ahead and as such the merger is disadvantageous for minority shareholders.

Alpine should ask the Third-party Committee to review this decision as occurred in the Hitachi Kokusai takeover summarized below:

–          On April 26, 2017, KKR announced a tender offer for Hitachi Kokusai’s (6756 JP) stock for JPY2,503 per share

–          The offer received backing from a third-party committee in the same way that Alps’ offer for Alpine has

–          Minority shareholders, however, viewed the price as unfair due to the excellent performance of Hitachi Kokusai’s business, and as a result Hitachi Kokusai’s share price traded at a premium to the offer price – the same way that Alpine’s share price is trading at a premium to the SER value

–          On July 31, 2017, Hitachi Kokusai’s stock price was trading at a 14% premium to KKR’s offer, and Hitachi Kokusai’s management asked the third-party committee whether their opinion had changed

–          On August 9, 2017, the third-party committee stated that they still believed that the original offer was fair, however, they could no longer agree that the transaction was not disadvantageous to shareholders

–          KKR subsequently raised the offer price twice in the following months

In Alpine’s case, where the stock is trading at an even higher premium to the offer price and its earnings also beat expectations, a truly independent third-party committee would also realize that the merger at the current SER is disadvantageous to shareholders, and would also demand a more accurate valuation following the revelation of the flaws in SMBC’s valuation as Oasis has described numerous times.

Over the past six months, the average premium has been 15%. In fact, the average premium from March 28th (after record date, until today is an average of 16.5%. Any of the rational mid-term to long- term holders would vote against the proposed transaction, in the interest of their investment.


What can you do about it?

It is now time for Alpine’s minority shareholders to stand up to Alpine and Alps and demand a fair deal. We recommend the following:

  1. Send letters to Alpine and Alps telling them of your dissatisfaction with the offer price.

  2. Sign up for the latest updates from Oasis below to help stay informed.

  3. Attend the Alpine EGM in mid-December 2018 – ensure now through your broker or custodian that you own the shares in your own name so that you can attend the AGM.

  4. Talk to us. What do you think? We want to hear from you. We are reachable at protectalpine@oasiscm.com

       Sign up with your email address in the footer below to receive news and the latest updates.

Alpine has accused minority shareholders of playing the money game but it is Alps that is playing the money game by trying to acquire Alpine at a deeply discounted value. Minority shareholders are merely demanding the fair value that they deserve.


The price that Alps is offering is deeply egregious even at the quickest of glances:

–          Offer is below Alpine’s book value

o   Alpine has grown its operating profit by 145% from the prior year, beat its original operating income forecast by 112% and beat its three times revised up forecast by 25% – we find it shocking that the SER not only gives no value to Alpine’s excellent business, but values Alpine below book value this that the company itself has no value and has no earnings

–          Discounted valuation to peers

o   Alpine’s management themselves have dismissed Clarion, Pioneer and JVC as true competitors as they say they have commoditized businesses that will struggle to survive unlike Alpine

o   The SMBC valuation clearly did not examine these comparators in any detail

o   Even at a quick glance, shareholders will realize that Alpine has a far stronger balance sheet that the competitors

o   Taking securities, pensions and net current assets into account, the discounted valuation becomes even more absurd:

–          Alpine’s stock price remains capped by the SER

o   As per the graph below, Alpine has exceeded its earnings expectations by 1,066% and beaten its original and revised forecasts three times in the last year this would have led to a rerating of the stock price significantly higher, but Alpine’s stock has been capped by the low SER valuation




On July 27, 2018, Alps and Alpine released a “Notice regarding the Execution of the Basic Agreement on the Business Collaboration between Alps Electric Co., Ltd. and Alpine Electronics, Inc.” In this notice, the companies state the following:

“…the Companies intend to accelerate the schedule, from the aspect of sales, to jointly promote joint development, from the aspect of manufacturing, to promote mutual utilization of manufacturing technologies and production sites, from the aspect of quality assurance, to promote the mutual utilization of evaluation and analysis facilities and, from the aspect of procurement, to strengthen functions of integrated purchasing and development purchasing.” [Emphasis Added]

We appreciate that Alps is eager to merge the businesses as soon as possible, however, Alpine’s management and board have a fiduciary duty to Alpine. At the current merger valuation, the merger will undoubtedly fail as over 42% of Alpine’s shareholder will vote against the deal.

With the impending failure of the deal, Alpine’s management and board of directors are in breach of their fiduciary duties by continuing to waste resources by focusing on the collaboration with Alps as these relationships will have to be unwound following the failure of the merger.

Instead, Alpine should be looking to develop strategic partners outside of Alps which would prove to be far more beneficial for the medium and long-term growth of corporate value.


We believe Alpine accepted such a low offer due to significant flaws and manipulation of the process. The valuation flaws include an extraordinarily long lead time, loss making comparable companies and cash and securities not being included in the Discounted Cash Flow (“DCF”) model. All of these issues culminated in the failure to protect minority shareholder rights.

Below we set out a summary of just a few of the flaws in the process and valuation – for a more detailed analysis please download our presentation here

Serious Flaws in the Fairness of the Process

1.      Lack of independence of the Third-party Committee. Hideo Kojima is a member of Alpine’s Audit and Supervisory Committee, an outside director of Alpine and a member of the Third-party Committee entrusted with ensuring that minority shareholders are protected in the proposed merger with Alps. Minority shareholders are heavily reliant on Kojima-san, however, we have found that Kojima-san has strong historical ties to Alps which suggest he is far more interested in helping Alps get the best deal possible, and not minority shareholders. Kojima-san was one of the Ernst & Young auditors that were mentioned in the Alps Japanese annual reports in fiscal years 2005 and 2006. He was also the auditor of Alps Logistics, a 46.6% subsidiary of Alps, in the same years, and became the auditor at Alpine in 2011 and a board member in 2016. It is abundantly clear that Kojima-san has had an intimate relationship with Alps and its subsidiaries for many years, and is likely far more concerned with Alps’ wishes than he is with Alpine’s minority shareholders’ rights.

2.      Alpine has dramatically outperformed. Alpine revised up its forecasts twice since the announcement, increasing operating profit from JPY6.5 billion to JPY11 billion. In its full-year results announcements, Alpine even beat those forecasts and posted an operating margin of JPY13.7 billion, 111% higher than the original forecast. Alps on the other hand is guiding a 17% drop in operating profit for FY19. Alpine is clearly outperforming Alps.

  1. Alps is acquiring Alpine cheaply before its stock price goes up. The acquisition will only be completed in 2019 making this the longest lead time of any merger in Japan in the past 30 years. We believe Alps is doing this in order to secure Alpine at a cheap price, well before the stock re-rates due to expected record operating profit in 2019 and 2020, detailed in the tender document and potential further growth. Alps knows Alpine’s operating business and future opportunities better than anyone else and we strongly suspect that they are using this distinct advantage to buy Alpine at the lowest price and well below the fair value.

  2. No Control Premium. Alps owns less than 50% of Alpine, and although it consolidates Alpine, we believe Alps should ensure Alpine minorities receive a fair price, and pay a control premium over a comparative-company neutral valuation of Alpine.

  3. No “Go Shop”. To protect minority shareholder interests, and conduct real price inquiry as to what the market would pay for the shares of Alpine and the control of the company, the board of directors should have approached other investors to determine what they would have paid for Alpine. This would be the true fair value. Shopping the deal is the only true test of fair value and the best deal for minority shareholders.

  4. The acquisition was a foregone conclusion. Even prior to the conclusion of the negotiations, Alpine had announced, on May 23, 2017, its intention to move the remainder of its headquarters staff to Alp’s headquarters. With most of its staff already located at Alps, we believe that Alps had increased its control over Alpine even further and as such there was no opportunity for Alpine to try and achieve the best price possible for its minority shareholders.

Serious Flaws in the Valuation Methodology Used by Alpine

Alpine relied on a valuation provided by Japanese investment bank SMBC and was based on the ranges of values determined by the market share price analysis, comparable company analysis, and DCF analysis.

1.      Average Market Price used is flawed

  • The chart below clearly demonstrates the flaw of using the average market price. In the months following the announcement of the share exchange, Alpine has had an incredibly strong performance and its stock price would have risen dramatically were it not capped by Alps which has performed poorly and is expected to continue. Alpine’s share price before the announcement is not an indication of its true value, Alps simply wanted to acquire the Company before its stock price increased.


2.   Comparable companies analysis is flawed

  • SMBC used three comparable companies – Pioneer, JVC Kenwood, and Clarion but two of these have fundamental issues such as continued losses unlike Alpine and thus undervalue Alpine

  • Pioneer Corporation has been loss-making in two of the last three years. It also has high exposure to the unpredictable after-market segment in volatile locations such as Russia and Brazil. This is a far cry to the stable businesses of the large European automakers to which Alpine is exposed. In its most recent results Pioneer has revised down its operating profit forecast this year by 76%

  • JVC Kenwood, as well as being loss-making at the time of the announcement, it has significantly different business compared to Alpine with less than 38% of its operating income coming from the automotive segment and an even smaller proportion coming from the OEM business. On other hand, Alpine has strong relationships with the top European automakers such as BMW and Audi.

  • Clarion has been restructuring and in its most recent results it has revised down next year’s operating profit forecast by 59%. This demonstrates that it was likely trading at a low valuation due to low investor expectations of Clarion.

3.   Discount Cash Flow Analysis is flawed

  • Alps is getting the cash, securities and investments for free. We have attempted to replicate the DCF based on the limited disclosure in the tender document but are unable to attain such a low share exchange ratio as exhibited by SMBC’s valuation. We conclude that it is likely that SMBC did not include the cash, securities portfolio, or the various Neusoft investments in their calculation. This is highly unfair to the minority shareholders as they are not being given the full value of their shareholding and the benefits of the cash and securities are being handed to Alps for free. This further demonstrates the lack of impartiality of SMBC, or the lack of seriousness of their process, and highlights the unfairness of the process.

  • The DCF employed does not use updated forecasts. As discussed above, Alpine’s business is performing far better than it was at the time of the announcement and all the forecasts would have to be revisited and increased. This will substantially increase the value of Alpine.

  • The missing JPY30 billion. We note from Alpine’s statement on December 4, 2017, that approximately ¥30 billion of cash has been arbitrarily allocated as operating cash for working capital, which reduced the valuation by almost JPY400 per share. The allocation of such a large amount of cash as operating cash is unacceptable and is against the accepted industry standard of allocating approximately 2% of revenue as operating cash.

  • Perpetual growth rate of 0% is inappropriate. SMBC’s use of a 0% perpetual growth rate is also peculiar and inappropriate considering the huge operating profit growth that was achieved in FY18 and forecast for FY19 and FY20.

  • EBITDA exit multiples are nonsensical. SMBC has chosen a very narrow EBITDA exit multiple range based on the poor comparator companies as described above. This methodology is merely used to lower the valuation of Alpine.


Oasis is a global investment firm founded in 2002 by Seth H. Fischer, who leads the firm as its CIO. Since its inception, Oasis made significant investments in Japan, and that commitment continues through today. The Oasis team currently comprises over 30 professionals with significant investment and operational expertise.


Oasis’s objective is to deliver strong absolute and risk-adjusted returns to our investors.  We believe that public companies should manage their businesses in the best interests of shareholders at all times.  

For certain of our investment strategies, we seek to invest in high-quality, but undervalued and underperforming, public companies, and to work collaboratively with management teams and boards to execute operational and strategic initiatives designed to drive long-term sustainable earnings growth for the benefit of all shareholders.  Oasis actively embraces its stewardship responsibilities and seeks to enhance the investment return for its investors by fostering and improving corporate value and the sustainable medium-to-long-term growth of its investee companies, through constructive engagement, purposeful dialogue, and in-depth knowledge of the companies and their business environments.

For more detail please visit our website – https://oasiscm.com/ 

For Oasis’ statement on the Japan Stewardship Code visit here – https://oasiscm.com/about-us/shareholder-stewardship/japan-stewardship-code


May 20, 2015 – Oasis met with Alpine management to discuss numerous issues regarding Alpine’s business, including its 15.6% stake in Neusoft.

June 5, 2015 – Letter sent by Oasis to Alpine, urging them to sell their 15.6% stake in Neusoft, which at that time was worth ¥130 billion.   

July 29, 2015 – Alpine passed a resolution to sell a third of its stake, 5.01% ownership, in Neusoft, and to use the proceeds of the sale to invest in a private venture with Neusoft.

(Link http://www.alpine.com/e/investor/library/pdf/kessai/ja/2015_en.pdf )

June 12, 2017 – Letter by Oasis to Alps and Alpine, describing the undervaluation of Alpine, which we valued in excess of ¥3,300 per share, our corporate governance concerns in relation to the increasing influence of Alps, and our expression of interest in acquiring a 50.1% stake for ¥1,800 per share

July 27, 2017 – Alps and Alpine announce the Share Exchange Agreement which valued Alpine’s shares at ¥2,108 on the day after the announcement, well below the valuation set out in our June 12, 2017 letter.

October 18, 2017 – Letter by Oasis to Alps and Alpine demonstrating a number of the flaws in their valuation and the process which led to Alps buying Alpine at a steep discount to fair value.

April 20, 2018 – Oasis submits Shareholder Proposals


Alps/Alpine merger, shareholder predicts merger will be voted down
Nikkan Kogyo Shimbun
Oct 29, 2018

Institutional investors increase pressure, move companies by voting for or against shareholder proposals
Nikkei Veritas
Oct 28, 2018

Hong Kong fund wants Alps Electric to sell Alpine shares
Nikkei Shimbun
Oct 27, 2018

Alpine/Alps buyout price undervalued compared with Clarion/Faurecia deal, says shareholder Oasis
Oct 27, 2018

Alpine/Alps take ‘First Step’ in investor engagement, but deal will fail on current terms, says Oasis’ chief
Oct 3, 2018

Corporate Japan is not warming to minority shareholders
Nov 3, 2017

Hong Kong Based Fund Owns 9% of Alpine [Japanese]
October 31, 2017

Hedge Fund Oasis Pushes Back Against Alpine’s Planned Takeover Deal
Wall Street Journal
October 30, 2017

Hedge Fund Oasis Urges Better Alps-Alpine Electronics Deal
October 30, 2017

Oasis: Dissent from Alpine’s Acquisition Condition for Alpine – As Underestimate [Japanese]
October 30, 2017


The Privatization of Alpine is Unfair Says Hong Kong Investor [Japanese] 
October 30, 2017

Alps’ Director, Scrutinize Hong Kong Fund Opinion from Now: Alpine Acquisition [Japanese]
Nikkei Quick
October 30, 2017

Oasis Management Acquires More than 9% of Alpine Shares [Japanese]
October 30, 2017

Hot Stock: Alpine Up Higher Due to Hong Kong Fund’s Statement Regarding the Merger with Alps [Japanese]
October 30, 2017

Oasis Claims Alpine Electronics “Tender Price is Too Low” [Japanese]
October 30, 2017