Lead sponsor and global institutional investor organizer, proposed a US$2.4 billion restructuring of Fortune 100 Borden Inc., that received significant institutional investor support and positive international media reporting, but following adoption of scorched earth tactics by the company’s then incumbent management that produced an unattractive risk reward ratio, withdrew the restructuring proposal.
Borden, Inc. had major sales and manufacturing operations throughout the world having grown aggressively through regional acquisitions of leading brands across a wide spectrum of industries, with over one-third of its sales and over one-half of its profit outside home US markets. Borden was extraordinarily diversified, suffering from a loss of passion for innovation and performance, with operations in food, consumer products, chemicals, construction products, commodities, in almost all stages of the beginning to end-consumer supplier chain. Approximately 40,000 employees.
Japonica’s superstructure team discovered the impact of unrecognized management decisions that created low and negative return on assets and equity in key business products aggregated across disparate business segments. Japonica created full financial statements, including balance sheets, for disparate businesses that were confusingly grouped in segments thought of low value into new groups with appropriate ownership structure with the potential to significantly increase shareholder value.
Japonica assembled a team of approximately 40 entrepreneurs and niche specialists who worked for almost 8 months discovering value gaps based on hidden nuggets of value and transformational business plans. While a compelling undervaluation, the risk reward ratio on an equity investment was not sufficiently compelling to justify an investment of Japonica’s resources at a price above that offered in a tax advantaged competing stock exchange offer.
Japonica offered, with the support of leading shareholders, to inject capital into this underperforming global special situation creating value through a comprehensive restructuring and new leadership. Japonica’s efforts resulted in a removal of the underperforming management team by the new owners.
Borden had a value destructive culture rooted in incompetent senior management, insider opportunism, and volume over profitability capital allocation. Japonica proposed a culture of respect for all stakeholders and a focus on high-value add products.
Japonica pioneered emerging internet technologies to increase: communications among leading steer investors as well retail investors, research analysis sharing, and global media communication management.
Japonica withdrew the Borden Inc. restructuring proposal following adoption of scorched earth tactics and avoided a bidding war where its competitor was offering an inflated stock exchange to exit a company exposed to massive consumer litigation liabilities.
Regarding ESG for Borden, Japonica proposed a shareholder friendly proactive white knight restructuring plan to transform a company that was so poorly managed that it was profiled on the cover page of a leading business magazine as “Poor Elsie: How inept management milks Borden dry”. Japonica’s proposal was to rebuild Borden for accelerated growth and have a full suite of corporate governance benchmark best practices, including injecting new capital into the company, stakeholder representation on board of directors, compensation based on achieving performance milestones, and no excessive leverage.