Tokyo Gas in Talks to Boost Elliott Stake After Buyout Proposal

Shareholder activism rises in Japan as Elliott pushes for change at energy companies

Tokyo Gas Co. is considering boosting Elliott Management Corp.’s stake in the Japanese utility after the activist investor proposed a takeover, people familiar with the matter said.

The talks are at an early stage and may not lead to a deal, the people said, asking not to be identified because the information is private. Elliott, which owns about 5% of Tokyo Gas, has proposed taking the company private in a deal that could value the utility at more than $15 billion, Bloomberg News reported last month.

Tokyo Gas shares have risen about 15% since Bloomberg reported Elliott’s proposal.

Shareholder activism is on the rise in Japan, as foreign investors push for change at some of the country’s largest companies. Elliott has been particularly active in Japan, taking stakes in companies such as Toshiba Corp. and SoftBank Group Corp.

Tokyo Gas is one of Japan’s largest utilities, supplying gas to about 11 million customers in the Tokyo metropolitan area. The company has been facing pressure from activist investors to improve its profitability and corporate governance.

In recent years, Tokyo Gas has been selling off non-core assets and cutting costs in an effort to boost its bottom line. The company has also been investing in new businesses, such as renewable energy and hydrogen.

Elliott’s proposal could force Tokyo Gas to accelerate its restructuring efforts. The activist investor is likely to push for the sale of more non-core assets, as well as changes to the company’s board of directors.

If Elliott is successful in taking Tokyo Gas private, it would be one of the largest takeovers of a Japanese company by a foreign investor in recent years.