Core Viewpoint - The portfolio managers of GAM funds express strong concerns regarding the proposed tender offer by Samvardhana Motherson International (SAMIL) for Yutaka Giken, highlighting inadequate minority shareholder protections and questioning the fairness of the transaction [1][2]. Group 1: Tender Offer Concerns - The initial open letter criticized the tender offer as the "most egregious takeover offer" in decades, with a mere 6.4% premium compared to an average of 28.7% in similar transactions, valuing Yutaka below its net cash position [2][40]. - The second letter emphasizes that the Board's response to their concerns was "totally insufficient," failing to justify the low economic value of the proposed sale [3][26]. - The tender offer is structured as a two-step transaction aimed at delisting Yutaka and squeezing out minority shareholders, requiring the Board to reassess the fairness of the price and process [4][27]. Group 2: Minority Shareholder Protections - The absence of a Majority-of-Minority (MoM) safeguard in a controller-initiated transaction is highlighted, as Honda retains significant influence and is expected to hold 19% of Yutaka's shares post-transaction [5][28]. - The all-cash tender offer lacks a minimum acceptance condition, allowing the transaction to proceed even with minimal minority shareholder participation, raising concerns about the adequacy of protections [6][30]. - The closed price-setting process in the two-step squeeze-out means the tender offer price effectively becomes the final price for all minority shareholders, which is determined without their participation [7][32]. Group 3: Valuation Issues - The tender offer price is deemed materially inadequate when compared to objective valuation benchmarks, with the offer price being significantly lower than the company's net cash, tangible book value, and comparable transaction valuations [34][48]. - The lack of transparency in the valuation process, including undisclosed assumptions in the DCF analysis, raises serious concerns about the fairness of the price determination [46][45]. - The portfolio managers argue that the tender offer price should be at least 50-70% higher than the current offer based on various valuation metrics [51][48]. Group 4: Potential Conflicts and Governance - Concerns are raised about potential ancillary transactions between SAMIL, Yutaka, and Honda post-closing, suggesting that these could deprive minority shareholders of fair value [11][39]. - The letter calls for an extraordinary general meeting to solicit minority shareholder views, which would enhance the legitimacy of the Board's decision-making process [10][38]. - The overall governance of the transaction is criticized for lacking transparency and failing to maximize shareholder value, which could damage the reputation of Japanese corporate governance [49][41].