Activist shareholders take on Toshiba in critical vote on company’s future
Toshiba faces a historic defeat at the hands of its shareholders who believe they have the support to force the industrial conglomerate to reopen takeover talks with private equity.
Investor voting calculations were shared with the FT ahead of a pivotal shareholder meeting on Thursday. The meeting is expected to be a showdown marking the culmination of a four-year battle between Toshiba and shareholders over the direction of the company.
Representatives from several major funds said they calculated that at least 37% of shareholders would vote against Toshiba’s plan to split the conglomerate in two, while around 50% would support a proposal by the company’s second largest shareholder, Singapore. . -fund 3D Investment Partners, asking to reopen discussions with private equity buyers.
Even a vote slightly below 50% could push Toshiba to resume talks with private equity firms KKR, Bain and Blackstone, which had discussed the possibility of a privatization deal for the entire company. last year, according to people familiar with the talks.
The move would be a setback for new Toshiba chief executive Taro Shimada, who said he backed the two-way split at a press conference this month, although some shareholders believe he could personally back the split. idea of a privatization deal. His appointment on March 1 came after the abrupt departure of former boss Satoshi Tsunakawa.
Toshiba suffered a series of scandals and management missteps starting in 2015 with an investigation into fraudulent accounting. The fight for the future of the 146-year-old conglomerate has pitted its traditional Japanese management against activist shareholders and is being closely watched as a test of the country’s corporate governance standards.
A strategic review committee set up to advise Toshiba’s board concluded last September that no viable deal proposals had been made by private equity buyers and recommended a three-way split. parts of society.
Shareholders rebelled, arguing that the review was flawed, prompting Toshiba to instead propose a two-way split. This plan has also come up against the opposition of militant shareholders who have stated that they oppose any option that does not envisage a takeover.
Over the past few days, proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis have spoken out against the proposed two-way split, as have the three major hedge funds holding the stock: Effissimo, 3D Investment Partners and Farallon. Capital.
Raymond Zage, an independent director on the Toshiba board who worked at Farallon, said he supported reopening talks with PE funds.
“It shouldn’t be difficult or time-consuming to get indications of preliminary offers,” Zage said, adding that shareholders could receive information to compare “a potential privatization with the potential value of the proposed spin-off plan.” .
Norway’s sovereign wealth fund, which owns 1.22% of Toshiba, said it would also vote against the proposed two-way split.
Toshiba opposed the buyout option, saying it could result in the company losing public orders. The conglomerate also said it would be forced to sell sensitive segments in its defense and nuclear divisions.
But proxy advisory firm ISS said in a report to shareholders in early March that the two-way split was not the ideal alternative. “Years of turbulent corporate governance and attempted restructuring in the public eye, a divided shareholder base and an uninspiring management record are leading to significant skepticism as to whether the current plan is superior to a privatization proposal.
He nevertheless recommended voting against the two-way split and the privatization proposals, arguing that the latter was premature at this stage.
Thursday’s votes are legally non-binding and will only require a simple majority to pass.