A few days ago, several major shareholders of Toshiba accused the Japanese conglomerate of failing to conduct comprehensive negotiations with buyers of private equity, and said that they would increase pressure on the board of directors and demand that the board of directors Discussions were resumed on matters related to the overall acquisition of Toshiba.
These investors stated that although Toshiba claims to have not received a convincing acquisition signal, they believe that at least two private equity buyers have discussed a valuation that is lower than the company’s current 4,743 yen (approximately US$42) per share. The price is 25% higher.
In total, shareholders who hold more than 30% of Toshiba's shares told the media that under the current circumstances, they plan to vote against a proposal made by the group in November. The proposal intends to split the 140-year-old industrial giant into three independent listed companies, rather than seeking full privatization.
Several executives expressed their suspicion that shareholders who hold at least 15% of Toshiba's shares will follow suit when a vote on the proposal is held early next year.
One of Toshiba's largest shareholders said that considering that many of Toshiba's problems in recent years have involved corporate management issues, this is a bad alternative. In addition, the company is also worried that the tripartite split will make investors lose the opportunity to consider privatization offers.
A manager of a major shareholder said: “A tripartite separation without a proper corporate management structure will cause this problem to continue to worsen.”
This spin-off proposal was made after months of strategic evaluation. Toshiba's second largest shareholder, 3D Investment Partners, stated in a letter to the company that the company "relied on an inadequate process to reach an early conclusion."
Among the 20 largest shareholders of Toshiba, at least two funds have indicated to the media that they are also considering more direct strategies, which may include convening emergency shareholder meetings and voting to clean up the board of directors.
A manager of a major shareholder said: “We are still waiting for some key information disclosures, such as the company’s attempt to attract private equity buyers and obtain a realistic price at the negotiating table. If the company cannot hear our request, then Convening temporary directors is definitely an option."
The skepticism of major shareholders began last month when the Strategic Evaluation Committee issued a statement deemed misleading by many funds. The committee was established to consider the long-term future of the Toshiba Group and to provide recommendations for action to the board of directors.
The committee stated in November last year that although it has approached six private equity groups (which are believed to include KKR, Bain, CVC, and Blackstone) to discuss full privatization, the price level envisaged by the acquisition fund is “relative to market expectations. The words are not convincing."
However, several of Toshiba's largest investors stated that after conducting their own research, they have good reasons to question the validity of the SRC procedure, which does not represent an official auction or the result of an auction.
In particular, it is worth mentioning that quite a few investors believe that at least two private equity groups have told SRC that in theory, the acquisition can make Toshiba worth more than 6,000 yen per share. Compared to the negotiation period, this premium was approximately 20% of the company's share price.
Last Friday, Toshiba stated that the company would “continue to provide sincere explanations to shareholders”. The company also referred to previous statements regarding SRC. The statement stated that the board of directors "unanimously" endorsed the SRC's recommendations.
In the past two weeks, external investor relations adviser Makinson Cowell (Makinson Cowell) got in touch with investors. The consultant conducted an investigation on Toshiba's behalf in July. Investors stated that they have given researchers no doubt about their concerns about the SRC procedure.
They added that although Toshiba claimed to be committed to improving transparency, they pointed out that another worrying fact is that Makinson Cowell’s latest survey results will not be shared with investors, and Toshiba has also confirmed this.
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