Ascender Capital Raises Concerns Over Conflicted MBO at MCJ (6670 JP) and Calls for Clearer General Shareholder Protections

• Ascender highlights the conflicted nature of the MBO, including the 34% rollover and deal protection arrangements.
• Ascender raises concerns on the gap between the public mid term plan and the DCF, and the impact of disclosure timing on the “unaffected” price.
• Ascender calls for an improved tender offer price, a Majority of Minority condition, credible market testing, and enhanced disclosure.

TOKYO–(BUSINESS WIRE)–#ConflictedMBO–Ascender Capital Limited (“Ascender Capital”), a Hong Kong-based investment firm focused on high-quality businesses across Asia, is a long-term investor in Japan’s software and system integration sector, where it has allocated over half of its assets in recent years. The firm actively monitors more than 100 publicly listed companies in the space and has met with the management teams of over 50 since 2015.

General shareholders protections and disclosure requests regarding the proposed MBO

To the Board of Directors and the Special Committee,

Ascender Capital (“we”) is a long-term shareholder of MCJ (the “Company”). For over two years, we have engaged with the Company on capital allocation and governance through multiple meetings, as well as a letter and a presentation to the Board, in which we proposed: (i) improving ROE through appropriately sized share buybacks and higher dividends; (ii) ensuring independent outside directors comprise a majority of the Board; (iii) upgrading the Company’s listing from Standard Market to Prime Market; and (iv) enhancing disclosure, including providing full disclosure in English. We raised these proposals because we believed they would support higher long-term value and valuation, and benefit all stakeholders.

We write regarding the management buyout announced on 5 February 2026 at JPY 2,200 per share (15.3x P/E). This is a conflicted transaction: the largest shareholder (Mr. Takashima) will tender and then re-invest post-delisting, and disclosed arrangements appear to reduce competitive tension. In such cases, guidance referenced by METI and governance expectations of the Tokyo Stock Exchange emphasize strong minority protections and a robust process.

Against this backdrop, the Company has historically maintained a payout ratio of around 30% (excluding the March 2024 commemorative dividend) and limited buybacks for more than a decade, resulting in net cash of roughly JPY 42bn (about 28% of pre-announcement market cap).

1. DCF and Mid-Term Plan timing

The Company states its DCF relied on management projections. The disclosed figures suggest a gap between the public MTP (14 May 2025) and the DCF input plan: Revenue JPY 236,900m and EBIT JPY 21,000m (public MTP) versus Revenue JPY 246,025m and EBIT JPY 25,960m (DCF input plan) in FY2028/3, implying a higher growth and margin improvement from 8.9% to 10.6%. If management believes the higher trajectory is achievable, shareholders deserve a clear reconciliation of why the public MTP did not reflect it before this transaction, what explains the difference, and key sensitivities for major free-cash-flow drivers.

2. Premium analysis: potentially inflated by the “unaffected” market price

The Company cites premium benchmarks to support that JPY 2,200 is “reasonable and fair.” Premiums may be a reference, but they cannot substitute for safeguards in a conflicted deal. We have concerns about the benchmarking as presented (e.g., only 22 transactions and heavy filtering), and limited disclosure on dispersion.

More importantly, the premium is mechanically driven by the “unaffected” market price. If an updated MTP consistent with the internal projections had been disclosed in a timely manner before the MBO announcement, the unaffected price may have been higher and the premium to JPY 2,200 could have been lower than the roughly 40% cited. We therefore request an explanation of disclosure timing and how the Board and Special Committee assessed the implications for the unaffected price and premium analysis.

3. How did the Company conclude JPY 2,200 is fair and what safeguards were considered?

The press release states the offer followed “multiple and sufficient negotiations” with Special Committee involvement. Yet shareholders cannot assess fairness without clearer disclosure of how the Board and Special Committee concluded that JPY 2,200 properly reflects fair value.

Public materials indicate that after the offeror’s third price proposal (JPY 2,200), the Special Committee on 3 February 2026 requested a higher price for general shareholders and sought a detailed explanation of why JPY 2,200 could be justified in light of the plan discussed in due diligence. The offeror responded that JPY 2,200 was its final price and would not be increased, and the Special Committee then “accepted” JPY 2,200 on 4 February 2026. To make “multiple and sufficient negotiations” meaningful, we request:

• the offeror’s concrete rationale for refusing any final uplift despite the Committee’s request; and
• the Board’s and Special Committee’s basis for accepting a “no-uplift” response, including what additional safeguards (e.g., an active market check and/or other minority protections) were considered if price could not be improved.

We also note the reported dissent of one Special Committee member, who reportedly expressed reservations not only regarding the tender offer price, but also as to whether the transaction would deliver credible corporate value enhancement.

4. Rollover, deal protections, and the need for Majority of Minority (MoM) and pre-signing market testing

Even if the re-investment is at the same price, it heightens perceived conflicts because the rolling shareholder retains exposure to post-transaction upside while general shareholders are cashed out. Shareholders therefore need fuller disclosure of post-transaction arrangements and how they were evaluated.

In addition, the disclosed tender commitment agreement covering roughly 34% and other deal protections appear to reduce competitive tension. That increases the importance of credible, disclosed pre-signing market testing, and strengthens the case for a MoM condition to directly confirm support from disinterested shareholders.

5. Requests and call to action

• Seek improved terms, including a higher price, given disclosure-timing concerns and the Special Committee’s own request for a final uplift;
• Adopt a Majority-of-Minority condition due to conflicted nature of the deal;
• Conduct and disclose a credible active market check, including what was done pre-signing;
• Obtain an independent fairness opinion, particularly if MoM is not adopted; and
• Enhance disclosure on post-transaction arrangements, deal protections, and the premium benchmarking methodology (including dispersion and sensitivity).

Finally, we believe a credible stand-alone alternative should be considered: the Company can remain listed and implement the value-enhancing measures we have previously proposed. With substantial net cash and historically conservative capital returns, the Company has ample capacity to strengthen capital returns while also improving governance and disclosure and pursuing a Prime Market upgrade, so that all shareholders can participate in the upside.

We look forward to a prompt and transparent response.

About Ascender Capital

Founded in December 2012, Ascender Capital is a Hong Kong-based value orientated investment firm concentrated on opportunities in Asia including Japan. The fund focuses on high-quality companies with a track record of profitability and earnings growth.

DISCLAIMER

Ascender Capital is the investment manager of private funds (the “Ascender Capitals Funds”) that own shares in MCJ. Ascender Capital has created this communication to enable fellow shareholders to carefully monitor how sincerely the board of directors and management of MCJ address our concerns, listen to shareholders’ views and endeavour to increase the value of MCJ shares in the best interest of all shareholders.

Ascender Capital is not and should not be regarded or deemed in any way whatsoever to be (i) soliciting or requesting other shareholders of MCJ to exercise their shareholders’ rights (including, but not limited to, voting rights) jointly or together with Ascender Capital, (ii) making an offer, a solicitation of an offer, or any advice, invitation or inducement to enter into or conclude any transaction or (iii) any advice, invitation or inducement to take or refrain from taking any other course of action (whether on the terms shown therein or otherwise).

Further, this communication and information to be found on its Website do not purport to recommend the purchase or sale of any security nor do they contain an offer to sell or a solicitation of an offer to buy any security. Nothing in this communication or on the Website is intended to be, nor should it be construed or used as, investment, tax or legal advice.

This communication and the Website exclusively represent the opinions, interpretations, and estimates of Ascender Capital in relation to MCJ’s business and governance structure. Ascender Capital is expressing such opinions solely in its capacity as an investment adviser of the Ascender Capital Funds.

Contacts

For enquiries please contact:

Jean-Charles Tisserand
Edouard Mercier
info@ascendercapital.com
+852 3758 2608