The Future of Japan’s DIC Museum’s Collection, Including Seven Rothko ‘Seagram Murals,’ Is in Doubt

Japan’s loss-making, severely indebted chemical company DIC Corporation is reevaluating the future of the Kawamura Memorial DIC Museum of Art, an institution that it owns.

DIC Corp’s board of directors, which is advised by the company’s recently formed Corporate Value Improvement Committee, met on August 27 to discuss DIC Museum’s operating strategy.

Hong Kong–based Oasis Management, an activist fund with a reputation for aggressively demanding changes at Japanese companies, is a major shareholder in DIC Corp.

Built in 1990, the museum is located in the city of Sakura in Japan’s Chiba Prefecture. Its collection boasts 754 artworks, 384 of which are owned by DIC Corp.

The collection includes seven of Mark Rothko’s “Seagram Murals” and works by Cy Twombly, Pablo Picasso, Rembrandt, Claude Monet, Jackson Pollock, Andy Warhol, and Robert Ryman, among other significant artists.

“As of June 30, 2024, the total value of the works owned by the Company, based on book value, amounted to approximately ¥11.2 billion [$77,500,000],” a statement released by DIC Corp on August 27 says.

In April, the Financial Times reported that DIC Corp refused to reveal how much of the art in the museum it owns. “Investors who have delved further believe that the company owns the majority of it, and that it could altogether be worth many hundreds of millions of dollars, perhaps even $1bn,” the publication wrote. 

“The Board of Directors has discussed the Company’s policy regarding operation of the museum extensively to date,” the statement reads. “If one regards the museum simply as an owned asset, it is clear that it is not necessarily being used effectively, particularly from the perspective of capital efficiency. Having identified the improvement of capital efficiency as an urgent management challenge, the Company believes the time has come to reconsider the positioning of the museum’s operations in terms of both social and economic value.”

DIC Corp is now considering three options for the museum’s future. They are maintaining the status quo, downsizing and relocation, or discontinuing operations. The Corporate Value Improvement Committee has advised that “continued operation of the museum under the current arrangement is not considered practicable”

“From the perspective of operating costs, the two viable proposals that should be considered in detail are downsize and relocate, assuming a relocation to Tokyo, or discontinue,” the committee advises, as per the statement.

In July, Oasis’s founder and chief investment officer, Seth Fischer, said Japanese asset managers are increasingly in favor of the activist fund targeting poorly performing companies.

Oasis, which does not publicly declare its assets under management, has initiated high-profile campaigns against several Japanese firms over the past year. The fund has demanded changes at each company.

“Our best allies are domestic asset managers who today see bad corporate governance as shameful,” Fischer said.

Japan’s government and the Tokyo Stock Exchange have been putting pressure on companies to improve their corporate governance and capital allocation over the past decade, with a view to drawing in more international investors.

The DIC Museum is slated to be temporarily closed in January 2025.

DIC Corp’s board of directors is meeting in December to “reach a firm conclusion” on the museum’s future, the statement adds.