Toshiba shareholder object to break-up, urges board

Toshiba shareholder object to break-up, urges board

Toshiba Corp’s second-largest shareholder on Wednesday objected to the Japanese conglomerate’s plan to split itself into three companies and instead called for offers from potential buyers.

Hedge fund 3D Investment Partners, which owns more than 7% of Toshiba, put forth its objections in a three-page letter to the company’s board, becoming the first major shareholder to formally oppose the break-up plan :// Outlined this month.

The letter, seen by Reuters, highlights shareholder unease over Toshiba’s proposal – a disquiet reflected in the company’s recent weak stock performance – and raises the possibility that the break-up will gain approval at a shareholder meeting early next year. can struggle to do.

A Toshiba spokesperson said it does not comment on personal exchanges with shareholders. 3D declined to comment.

Singapore-based 3D said in the letter that the proposed break-up makes it “extremely impossible” to solve any of Toshiba’s current problems and “very likely to create the three underperforming companies in Toshiba’s image today.”

Some other hedge fund shareholders also told Reuters on condition of anonymity that they were disappointed that Toshiba had turned down the idea of ​​going private.

In its letter, 3D said that Toshiba should “open a formal process, develop a compelling plan for each business, provide detailed due diligence materials and management meetings to interested financial and strategic parties, stretch proposals from those parties.” should encourage and enable and evaluate the best way forward”.

Toshiba launched its strategic review after pressure from investors following a governance scandal over management’s alleged collusion with Japan’s trade ministry to pressure foreign shareholders.

five month review

During the five-month review, Toshiba’s review committee held talks with six private equity firms, the sources said, including KKR & Co and Brookfield, which are exploring strategic ideas, including going private.

While the review committee never conducted the auction process with due diligence for the potential sale, it has said that negotiations with private equity firms suggested that the potential offers were “not compelling relative to market expectations”.

The review committee, which includes five external board of directors, has said that it has not received any substantive proposal to take the company private. The idea of ​​going private, he has said, arouses concern within Toshiba.

However, in its letter — which was also addressed to the review committee — 3D criticized the committee for its failure to ask for offers for the sale of Toshiba, or the partial disposal of some of its businesses.

The fund said, “Highly reliant on dubious claims of regulatory, employee morale and customer concerns about a motivated launch model and a separate ownership structure without a separate management team, (the committee) compromised its review and relied on, Fund said.

3D, founded in 2015 by former Goldman Sachs banker Kanye Hasegawa, was one of dozens of foreign hedge funds that participated in a $5.4 billion capital injection into Toshiba during the 2017 crisis triggered by the bankruptcy of its US nuclear power unit.

Toshiba plans to complete the overhaul by March 2024.

Founded in 1875, Toshiba plans to keep its energy and infrastructure divisions in one company, while its hard disk drive and power semiconductor businesses will be the backbone of the other. One-third will manage Toshiba’s stake in flash-memory chip company Kioxia Holdings and other assets.


Shares of Toshiba are down more than 4% since the plan was first reported by Nikkei Business Daily on Nov.

The stock was down 1.2% at 4,688 yen versus 0.7% on the benchmark Nikkei index early Wednesday.

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