Shareholders of Japanese drugstore chain operator Tsuruha Holdings will vote Monday on a proposal which effectively results in its acquisition by supermarket chain Aeon, a move that has already been panned by major investors and proxy advisers.

The chorus reflects rising shareholder activism in Japan in recent years as the country¡¯s governance reforms embolden investors. Their disappointment in the planned deal centers around the perceived low premium it would pay to Tsuruha shareholders.

Aeon, the country¡¯s largest supermarket chain operator, last month said it will launch a tender offer to make Tsuruha a consolidated subsidiary at ?11,400 per share as it tightens its grip on the drugstore market.

The announcement, however, received an immediate rebuke from Orbis Investments, the second largest shareholder after Aeon with a 9.7% stake. Aeon had about a 19.5% stake as of Feb. 28.

Orbis said the deal is flawed and will allow Aeon to take a controlling stake in Tsuruha on ¡°outrageous terms,¡± according to the asset manager¡¯s presentation document.

The deal is unfair, Orbis argues, given that Aeon paid ?15,500 per share when it bought a 13.6% stake from activist fund Oasis Management in February 2024.

Aeon said in a statement that synergies from the planned integration should benefit all stakeholders including Tsuruha shareholders.

Orbis, a value-style but not an activist investor, said it will oppose Tsuruha¡¯s proposal of a share exchange with Welcia Holdings, another drugstore already majority-owned by Aeon, to make Welcia a wholly-owned subsidiary of Tsuruha.

The U.K. asset management firm was joined by Norges Bank in opposing the deal. Norway¡¯s sovereign fund holds 1.5% of Tsuruha¡¯s shares, according to data compiled by Bloomberg.

Two major proxy advisers ¡ª Institutional Shareholder Services and Glass Lewis & Co. ¡ª also recommended opposing the proposal for similar reasons, a move that could prompt some Japanese asset managers to side with Orbis. The business integration proposal needs a two-third majority to pass.

¡°I think we have a good chance of winning at the Tsuruha (annual general meeting),¡± said Brett Moshal, head of the Japan investment team at Orbis Investments. ¡°We have been spending a lot of time talking to Tsuruha shareholders, mainly in Japan. I find that the discussions have been hugely encouraging.¡±

Tsuruha¡¯s share prices rose above Aeon¡¯s tender offer price, a sign investors see chances Aeon may need to raise its price to win over minority shareholders.

The race is already on to shore up positions ahead of a possible showdown. Aeon has increased its stake to 26.7% while Orbis also increased its holdings to 10.3%, according to respective disclosures.

Akio Hoshi, professor of law at Gakushuin University, said Aeon¡¯s proposed price may not satisfy many investors given that...