The 3D proposal: hiving off real estate to refocus on beer (2024)

Voted down, yet the separation carries

The heart of this decision is that management voted 3D’s proposal down at the shareholders’ meeting and yet, on its own initiative, carried out the very thing that proposal had pressed for — the separation of the real estate. Broff’s nomination to the board was rejected without winning even 30% support. Even so, hiving off the property business, Yebisu Garden Place included, pointed in the same direction as 3D’s demand: surface the unrealized gains and lift capital efficiency. Steel Partners had put the same question in 2007, and Sapporo had turned it away with a takeover defense and kept its structure intact. Sixteen years on, the company chose separation rather than defense. Who won the vote, and the course management actually took, were decided in different places.

What also lingers is the question of how much asset value, apart from the core business, an operating company should hold. The choice made from 1986 — to keep, rather than sell, the site of the old Ebisu brewery — covered the weakness of beer with rental income and, in exchange for stability, left low capital efficiency in place for decades. Strip that asset away, and the beer business loses its cover and stands directly exposed to the market’s judgment. Whether the $3.2B (¥477bn) raised by letting the real estate go will generate any growth in a mature domestic beer market and a turnaround of the overseas liquor business is not yet visible as this is written. Handing a symbolic piece of central-Tokyo real estate to a foreign fund, this decision throws its question — what can an asset-rich company show in its core business? — at Japanese firms today.