--- title: "Exclusive-Activist Palliser takes stake in Japan's SMC, proposes $3.8 billion buyback, letter shows" type: "News" locale: "en" url: "https://longbridge.com/en/news/284133552.md" description: "London-based activist fund Palliser Capital has acquired a significant stake in Japan's SMC Corp, proposing a $3.8 billion share buyback. Palliser argues that SMC is undervalued despite its strong investments in production capacity, and it should enhance utilization and margins. The fund believes SMC is well-positioned to benefit from rising semiconductor demand. Palliser, a top-25 shareholder, emphasizes the need for disciplined cash deployment in light of upcoming corporate governance reforms in Japan. SMC's shares have lagged behind peers, indicating a disconnect between market valuation and business fundamentals." datetime: "2026-04-27T01:12:18.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/284133552.md) - [en](https://longbridge.com/en/news/284133552.md) - [zh-HK](https://longbridge.com/zh-HK/news/284133552.md) --- # Exclusive-Activist Palliser takes stake in Japan's SMC, proposes $3.8 billion buyback, letter shows TOKYO, April 27 : London-based activist fund Palliser Capital has made a "significant" investment in Japanese factory automation firm SMC Corp and has proposed it conduct a $3.8 billion buyback, according to a letter sent to the company and reviewed by Reuters. Palliser believes SMC, which makes machinery used in chipmaking, has shown foresight in investing in production capacity but said the company is undervalued and should focus on improving utilisation and margins, the letter showed. SMC has capacity to conduct a 600 billion yen ($3.8 billion) share buyback over the next two years and maintain a consistent dividend payout ratio of at least 40 per cent, the activist fund said in the letter. As investment in artificial intelligence boosts the chipmaking sector, Japanese firms with strengths in niche areas of the supply chain have become a particular focus for investors. "With strengthening semiconductor demand and recovery in non‑semiconductor industries, SMC is well positioned to optimise capacity utilisation," Palliser said in the letter. Shares in SMC, which was founded in 1959 and whose products include valves, actuators and chillers, have underperformed its peers over the last five years, the letter said. There is "a significant disconnect between SMC's current market valuation and the quality of its underlying business fundamentals," according to the letter. Palliser is a top-25 shareholder in SMC, two sources familiar with the matter said, declining to be named because the information is not public. The letter did not provide further detail on the stake. Palliser declined to comment. SMC did not immediately respond to a request for comment. Surging activist activity in Japan is putting continued pressure on companies as corporate governance reforms push firms to unwind cross-holdings, sell non-core ⁠assets and buy back shares. Revisions to the corporate governance code stressing the need to ensure efficient use of cash are raising expectations that more companies may deploy their cash reserves. "SMC would demonstrate leadership in disciplined excess cash deployment ahead of the anticipated revisions to Japan's corporate governance code later this year," according to the letter. Palliser has previously taken stakes in MSG maker Ajinomoto, which produces film used in package substrates for chips, and toilet manufacturer Toto, which makes electrostatic chucks used to hold wafers during chipmaking. Its other investments have included Keisei Electric Railway and Japan Post Holdings. ($1 = 159.6800 yen) ### Related Stocks - [SMCAY.US](https://longbridge.com/en/quote/SMCAY.US.md) - [SOXL.US](https://longbridge.com/en/quote/SOXL.US.md) ## Related News & Research - [Technoprobe to open second probe card plant in Suzhou, China](https://longbridge.com/en/news/295086533.md) - [Metrology advances tackle GaN, ceramics, and alloy mixing challenges](https://longbridge.com/en/news/294963329.md) - [Argan unit SMC completes acquisition of ValCor for about $8.3 million](https://longbridge.com/en/news/294871056.md) - [Applied Materials (AMAT) Heads Into Earnings With AI Demand In Focus On A Priced In Debate](https://longbridge.com/en/news/295307398.md) - [Applied Materials, Inc. $AMAT Position Cut by Avity Investment Management Inc.](https://longbridge.com/en/news/295318720.md)