Activist Nihon Global puts forth ideas to build shareholder value at noodle giant Toyo Suisan

Toyo Suisan, an international conglomerate, is a global leader in the instant noodle business, particularly in North America. It dominates the market with a significant market share in the US and Mexico. However, despite its success, the company is undervalued due to its lack of strategic focus, poor capital allocation, and absence of a formal shareholder return policy. To maximize its value, Toyo Suisan should divest its non-core businesses and concentrate on its core noodles business. By doing so, it can potentially close the valuation gap with its competitor, Nissin Foods, and become a global consolidator in the instant noodle market. Activist investor Nihon Global has proposed reasonable shareholder proposals to increase dividend payout, conduct share buybacks, implement a director compensation program, and disclose cost of capital. While activism in Japan may present challenges, there is a growing trend of private equity investors engaging in public company activism in Asia. This highlights the potential for shareholder value creation and the limitations of activism in Japan.