Several of Toshiba’s largest shareholders accuse the Japanese conglomerate of failing to fully resume talks with private equity buyers, saying they will increase pressure on the board to revive talks on a full buyout of the company.
Investors said that despite Toshiba’s claim that it had not received convincing indications of a buyout, they believe at least two private equity buyers discussed valuations that are at least 25 percent higher than the company’s current price of ¥ 4,743 ($ 42) per share.
As a measure of their concerns, shareholders who collectively hold more than 30 percent of Toshiba’s shares told the Financial Times that as things stand, they plan to vote against a proposal tabled in November that the 140-year-old industrial giant in three separately listed businesses rather than pursuing full privatization.
Several executives have said they suspect holders of at least another 15 percent of Toshiba’s shares will follow suit when the proposal is voted on early next year.
In addition to concerns that the three-way division has denied investors the chance to consider a privatization offer, one of the largest shareholders said it was a weak alternative given the extent to which management issues appears in Toshiba’s many problems in recent years.
“Carrying out a three-way distribution without an appropriate management structure in place will lead to an exacerbation of management problems,” said a manager at one of the largest shareholders.
The divisional proposal stemmed from a months-long strategic review that Toshiba’s second largest shareholder, 3D Investment Partners, said in a letter to the company, “came to a premature conclusion of an inadequate process”.
At least two funds among Toshiba’s 20 largest holders have told the Financial Times that they are also considering more immediate tactics, which could include calling an emergency meeting of shareholders to vote on a purification of the council.
“There are important revelations that we are still waiting for about the company’s attempt to recruit private equity buyers and get a realistic price on the table. “If the company does not hear that we are asking for it, an EGM is definitely one option,” said a manager of one major shareholder.
The heightened agitation of shareholders follows last month’s release of what several funds described to the FT as a “misleading” statement by a strategic review committee set up to consider the company’s long-term future and recommend action to the board .
The committee said in November that although it became involved with six private equity firms – understand that this includes KKR, Bain, CVC and Blackstone – to discuss a complete privatization, the price level envisaged by the buyout funds was “not compelling relative to market expectations”.
But several of Toshiba’s largest investors said they, after conducting their own research, had strong reason to question the validity of both the SRC’s process, which did not represent a formal auction, as well as its outcome. questioned.
In particular, a significant group of investors believe that at least two PE firms have indicated to the SRC that a buyout could theoretically value Toshiba at more than ¥ 6,000 per share – a premium of around 20 per cent on the company’s share price during the discussions.
Toshiba could not be immediately reached for comment. On Friday, a Toshiba spokesperson said the company would “continue to provide sincere explanations to our shareholders”. The company also referred to its earlier statement on the SRC, whose recommendations noted that the board had “unanimously” endorsed.
Within the past two weeks, investors have been contacted by Makinson Cowell, an outside investor adviser who previously conducted a survey on behalf of Toshiba in July. Investors said they left the researchers with little doubt about their concerns about the SRC’s process.
They added that, despite Toshiba’s claims of commitment to greater transparency, they cited as another cause for concern the fact that the results of Makinson Cowell’s latest survey would not be shared with investors, a policy that was confirmed by a Toshiba spokesperson.
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