3D Investment Partners Responds to Sapporo’s Latest, Inadequate and Incomplete Statement

TOKYO--( BUSINESS WIRE )-- 3D Investment Partners Pte. Ltd., the asset management company of 3D OPPORTUNITY MASTER FUND (collectively referred to as “3D,” "we" or "our"), today released a supplemental presentation in response to a presentation released on February 28, 2025 (the "February 28 Presentation") by Sapporo Holdings Limited ("Sapporo" or “the Company") (2501.T) in connection with the Company’s 101st Annual General Meeting of Shareholders (the "AGM"), scheduled to be held on March 28, 2025.

Sapporo’s February 28 Presentation failed to allay our concerns about Sapporo’s governance, Board composition, commitment to maximize the proceeds of its Real Estate business, or lack of capital discipline needed to deploy the proceeds from the divestiture of the Real Estate business in an optimal manner.

Our presentation is available at: https://www.3dipartners.com/engagement/sapporo-agm-en-202503-addition.pdf

Our Engagement with Sapporo

3D is Sapporo’s largest shareholder, holding approximately 19% of its outstanding shares. For nearly three years, we have sought to engage constructively with the Company’s Board of Directors (the “Board”) and its executives to improve governance and oversight and enhance corporate value. Our engagement has had a meaningfully positive impact on the strategic direction and plan to divest its Real Estate business, which resulted in Sapporo’s share price outperforming compared to its competitors and the market.

We are supportive of Sapporo’s efforts to focus on its core Alcoholic Beverages business and divest most of its real estate assets. However, Sapporo has the lowest profit margin and ROE of all listed beer companies in the world, and it has also recorded impairment losses on all of its major overseas alcoholic business acquisitions. Furthermore, it has never achieved its sales and operating profit targets including the final year of its mid-term management plan for the past 19 years. Considering the above, we are deeply concerned that the strategic review process that is underway to introduce external capital into the Real Estate business is not designed to maximize corporate value. Furthermore, given Sapporo’s stated policy to deploy the proceeds for large-scale investments in the beer business, we are deeply concerned that, without more effective oversight and enhanced capital discipline, the Company may repeat the capital allocation mistakes of the past and once again incur significant impairment losses.

Concerns Regarding Sapporo’s February 28 Presentation

The Company’s February 28 Presentation did not address these concerns.

Not once in its 35-page presentation, or any of its prior communications, has Sapporo pledged to maximize the proceeds from the divestiture of Sapporo’s Real Estate business. In our view, such a clear affirmation is a prerequisite for an effective process therefor and entirely consistent with the Board’s fiduciary duties. Such a commitment should not be controversial. The fact that the Board is unwilling to make this simple commitment illustrates why improved oversight is urgently needed to avoid making such process arbitrary.

In the February 28 Presentation, Sapporo touts the number of meetings held by the Audit and Supervisory Committee and the proportion of independent outside directors on the Board as supposed evidence of “strengthened” corporate governance. In our view, however, the effectiveness of a governance system should be judged by the outcomes it generates. Despite Sapporo’s claims that the current Board is optimal for improving corporate value and shareholder interests, we believe the Company’s shortcomings – a suboptimal business configuration; the lowest profit margin and ROE in the world in the Company’s core Alcoholic Beverages business; and a track record of value-destructive acquisitions – reflect inadequate oversight that has impaired Sapporo’s corporate value.

At least, Sapporo's shareholders have never benefited from the Board that Sapporo has evaluated as “optimal”.

We find it telling that, in the Company’s February 28 Presentation, the Company did not dispute the fact that:

• Although the chairperson of the Audit and Supervisory Committee is required to be highly independent, it is chaired by Mr. Miyaishi, who is a former executive of Sapporo Breweries rather than an independent outside director;

• Mr. Miyaishi, the Chair of the Audit and Supervisory Committee, as a director of Sapporo Breweries, was directly involved in the failed acquisitions of Anchor Brewing and Stone Brewing, that have respectively led to entire or considerable impairment losses, which means he lacks the independence as a member of the Audit and Supervisory Committee; and

• Mr. Miyaishi, the Chair of the Audit and Supervisory Committee lacks financial and accounting expertise, has no experience in real estate or selling business assets, and has never served in a role overseeing capital allocation, which means he lacks the expertise required for accounting and operational audits.

Our Proposal: Strengthening the Audit and Supervisory Committee to Enhance Board Oversight

We believe it is essential for the Audit and Supervisory Committee to be comprised of independent directors with expertise in accounting standards, financial management, auditing, M&A, capital allocation and real estate. Only then will the Audit and Supervisory Committee be positioned to effectively evaluate the reasonableness of Sapporo’s business strategies and transactions such as maximizing the proceeds from divesting the Real Estate business and optimally allotting its proceeds and prevent failures in judgment which is important and irreversible.

We are seeking to appoint Mr. Paul Brough as an outside director who is a member of the Audit and Supervisory Committee.

Mr. Brough is extremely well qualified for the role, given his extensive knowledge of accounting, real estate, business development and restructuring, M&A, asset sales and capital allocation. However, in the February 28 Presentation, Sapporo seeks to justify its opposition to Mr. Brough’s appointment by making false and misleading claims regarding his independence and expertise. To be clear:

• Mr. Brough is entirely independent of 3D.

• Mr. Brough is not an employee of 3D, and 3D has never nominated or recommended him for any other public company board.
• Mr. Brough has no involvement in 3D’s operations, investments, or decision-making, nor does he participate in IR activities for investors.
• Mr. Brough intends to terminate his advisory agreement with 3D if he is appointed as an outside director of Sapporo.
• Mr. Brough is independent by the standards of the Tokyo Stock Exchange and Sapporo’s publicly disclosed guidelines.

• Mr. Brough possesses valuable expertise that would augment the Board.

• Sapporo acknowledges that Mr. Brough’s core skill is financial accounting, but his core skill extends far beyond it.
• Mr. Brough is an experienced public company director and turnaround expert. He has been involved as an advisor and as a director in many restructurings, strategic review processes, asset sales, acquisitions, take-private transactions and real estate businesses.
• He has a proven track record of working collaboratively with his fellow directors in complex and sensitive situations, including at companies like Toshiba Corporation during its strategic review process and Noble Group Holdings limited during its restructuring.
• He is well-versed in M&A, shareholder engagement and corporate governance and, in our estimation, has more experience in these areas than any of Sapporo’s incumbent directors.

Conclusion

We encourage our fellow shareholders to review today’s presentation and the other materials we have prepared highlighting the case for strengthening the Audit and Supervisory Committee to enhance Board oversight at Sapporo and to vote in favor of our proposal to appoint Mr. Brough as an outside director who is a member of the Audit and Supervisory Committee at the Company’s upcoming AGM.

About 3D Investment Partners Pte. Ltd.

3D Investment Partners Pte. Ltd. is an independent Singapore-based Japan focused value investing fund manager founded in 2015. 3D Investment Partners Pte. Ltd. focuses on partnering with managements who share its investment philosophy of medium- to long-term value creation through compound capital growth and a common objective of achieving long-term returns.

Disclaimer

This press release is provided for informational purposes only and does not constitute an offer to purchase or sell any security or investment product, nor does it constitute professional or investment advice. This press release should not be relied on by any person for any purpose and is not, and should not be construed as investment, financial, legal, tax or other advice.

3D Investment Partners Pte. Ltd. and its affiliates and their related persons (“3DIP”) believe that the current market price of Sapporo does not reflect its intrinsic value. 3DIP acquired beneficially and/or economic interests based on its own idea that Sapporo securities have been undervalued and provides attractive investment opportunity and may in the future beneficially own and/or have an economic interest in, Sapporo securities. 3DIP intends to review its investments in Sapporo on a continuing basis and, depending upon various factors including, without limitation, Sapporo's financial position and strategic direction, the outcome of any discussions with Sapporo, overall market conditions, other investment opportunities available to 3DIP, and the availability of Sapporo securities at prices that would make the purchase or sale of Sapporo securities desirable, 3DIP may, from time to time (in the open market or in private transactions), buy, sell, cover, hedge, or otherwise change the form or substance of any of its investments (including the investment in Sapporo securities) to any degree in any manner permitted by any applicable law, and expressly disclaims any obligation to notify others of any such changes.

3DIP provides no representation or warranty, either expressed or implied, in relation to the accuracy, completeness, or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets, or developments referred to herein. 3DIP expressly disclaims any responsibility or liability for any loss howsoever arising from any use of, or reliance on, this press release or its contents as a whole or in part by any person, or otherwise howsoever arising in connection with this press release. 3DIP hereby expressly disclaims any obligation to update or provide additional information regarding the contents of this press release or to correct any inaccuracies in the information contained in this press release.

3DIP disclaims any intention or agreement to be treated as a joint holder (kyodo hoyu sha) under the Financial Instruments and Exchange Act of Japan, a closely related party (missetsu kankei sha) under the Foreign Exchange and Foreign Trade Act with other shareholders, or receiving any power or permission to represent other shareholders in relation to the exercise of their voting rights, and has no intention to solicit, encourage, induce or require any person to cause other shareholders to represent such voting rights.

3DIP does not have the intention to make a proposal, directly or through other shareholders of Sapporo, to transfer or abolish the business or assets of Sapporo and/or Sapporo group companies at the general shareholders meeting of Sapporo. 3DIP does not have the intention and purpose to engage in any conduct which constricts the continuing and stable implementation of business of Sapporo and/or Sapporo Holdings group companies.

This press release may include content or quotes from news coverage or other third-party public sources (“Third-Party Materials”). Permission to quote from Third-Party Materials in this press release may neither have been sought nor obtained. The content of the Third-Party Materials has not been independently verified by 3DIP and does not necessarily represent the views of 3DIP. The authors and/or publishers of the Third-Party Materials are independent of, and may have different views to 3DIP. The quoting Third-Party Materials in this press release does not imply that 3DIP endorses or concurs with any part of the content of the Third-Party Materials or that any of the authors or publishers of the Third-Party Materials endorses or concurs with any views which have been expressed by 3DIP on the relevant subject matter. The Third-Party Materials may not be representative of all relevant news coverage or views expressed by other third parties on the stated issues.

In respect of information that has been prepared by 3DIP (and not otherwise attributed to any other party) and which appear in the English language version of this press release, in the event of any inconsistency between the English language version and the Japanese language version of this press release, the meaning of the Japanese language version shall prevail unless otherwise expressly indicated.

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