Toshiba shareholders accuse the group of ignoring privatization bids

Some of Toshiba’s biggest shareholders are accusing the Japanese group of not pursuing enough talks with private equity buyers, and say they will put pressure on the board to reinstate the companies. discussions about the acquisition of the entire company.

Investors said that despite Toshiba’s claims that they received no convincing signs of an acquisition, they believe that at least two private equity buyers discussed a valuation at least 25 percent higher. % of the company’s current price of 4,743 yen ($42) per share.

To gauge their concerns, shareholders who hold more than 30% of Toshiba’s shares, told the Financial Times, that when the matter arose, they planned to vote against a proposal raised in November that would disrupting a 140-year-old industry. giant into three separate listed businesses rather than pursuing full privatization.

Some managers said they doubt that holders of at least another 15% of Toshiba’s shares will follow suit when a vote on the proposal is held early next year.

In addition to concerns that the tripartite split has denied investors the opportunity consider a privatization proposal, one of the largest shareholders said it was a bad alternative considering how much management problem featured in many Toshiba problems in recent years.

“Carrying out a tripartite split without a proper governance structure will lead to worsening governance problems,” said a manager of one of the largest shareholders.

The split proposal emerged from a months-long strategic review that Toshiba’s second-largest shareholder, 3D Investment Partners, said in a letter to the company that reached “a premature conclusion for a incomplete process”.

At least two funds among Toshiba’s 20 largest shareholders told the Financial Times they were also looking at more immediate tactics, which could include calling an emergency meeting of shareholders to vote on the matter. purge of the board.

“There are key revelations we are still awaiting regarding the company’s efforts to attract private equity buyers and get real prices across the board. If the company doesn’t hear us asking for it, EGM is definitely an option,” said the manager of a major shareholder.

Increased agitation among shareholders following the announcement last month of what some funds described to the FT as a “misleading” statement by a strategy review committee assembled to review the company’s long-term future and recommend action to the board.

The Commission said in November that although it joined with six private equity firms – understood to include KKR, Bain, CVC and Blackstone – to discuss full privatization, the price point envisioned by buyout funds as “unattractive relative to market expectations”.

But some of Toshiba’s biggest investors say that, after conducting their own research, they have good reason to question the validity of both SRC’s process, which does not represent for an official auction as well as its results.

In particular, a significant group of investors believe that at least two PE companies have indicated to SRC that the acquisition could theoretically value Toshiba at more than 6,000 yen per share – a premium of about 6,000 yen. 20% on the company’s share price in discussions. .

Toshiba could not be immediately reached for comment. On Friday, a Toshiba spokesman said the company would “continue to provide sincere explanations to our shareholders”. The company also mentioned previous statement about the SRC, to which the recommendations it noted were the council “unanimously” endorsed.

Within the past two weeks, Makinson Cowell, an external investor relations adviser, has been reaching out to investors, who previously conducted a survey on behalf of Toshiba in July. The investors said they had cast doubt on the researchers’ suspicions about the SRC’s process.

They added that, despite Toshiba’s statement of commitment to more transparency, they cited as another cause for concern that the results of Makinson Cowell’s latest survey would not be shared with investors. , a policy endorsed by a Toshiba spokesperson.