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LIM, an activist shareholder, has asked Japan Tobacco to sell its drug unit.

One-third of Japan Tobacco (OTC:JAPAF) Inc. is owned by the government. Shareholders want the company to sell its listed drug unit, Torii Pharmaceutical Co., to increase shareholder value.

In a letter seen by Reuters, Hong Kong-based activist fund LIM Advisors asked Japan Tobacco to sell its 53% stake in a drug company best known for its anti-allergy products and use the money to buy back 250 billion yen ($1.94 billion) worth of shares.

The letter also said that Japan Tobacco doesn’t have any synergies with the drug unit or the skills to manage its research and development. LIM plans to bring its proposal to the annual general meeting of shareholders in March.

Japan Tobacco didn’t want to say anything, including if it had gotten LIM’s letter. LIM refused to comment.

LIM, which owns less than 1% of Japan Tobacco shares, wants to do this. This comes at a time when Japanese regulators are against so-called parent-child listings because they can hurt the rights of minority shareholders.

LIM is also pushing for changes to corporate charters to improve governance. For example, he wants to make it illegal for Japan Tobacco executives to take jobs at Torii after they retire, which is a type of “golden parachute” arrangement called “amakudari.”

Related: Medicago’s tobacco connections endanger the company’s expansion in the COVID shot market.

George Long, who had worked in investment funds for a long time, started LIM in 1995. In the last few years, they have started a number of governance motions in Japan.

The fund suggested that the advertising company Digital Holdings Inc. sell a listed subsidiary in 2021, and it worked against amakudari at the Nissan (OTC: NSANY) Motor Corp. subsidiary Nissan Shattai Co.

($1 = 128.5800 yen)

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