February 3, 2023

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Toshiba agrees ceasefire with investors but fight is far from over

2 min read

For four years, Toshiba has been at war with its investors in an acrimonious conflict that has smashed the decades-old conventions of corporate Japan.

But now, after a bruising series of clashes and defeats for the company in shareholder votes, Toshiba is poised to make history once again — with a ceasefire.

In a decision that investors believe could break a deadlock that has threatened to paralyse one of Japan’s biggest industrial groups for years, Toshiba agreed last week to appoint two independent board members from activist shareholders Elliott Management and Farallon Capital.

The move cleared the way for the 146-year-old industrial conglomerate to proceed with Japan’s biggest ever take-private deal: a potential management buyout in excess of $20bn that has drawn bids from at least eight of the world’s biggest private equity firms and will probably involve domestic investors, a state-backed fund and corporate buyers.

The appointments were also the first time a Japanese company of Toshiba’s size, prominence, technological sensitivity and proximity to the government had invited activist shareholders on to its board.

On Thursday, Toshiba will have an opportunity to present a long-term vision for the group at a strategy meeting that could convince potential acquirers to increase their bids.

Raymond Zage, chair of Toshiba’s nomination committee, said the appointments would help to strengthen Toshiba’s alignment with shareholders, enhance governance and ensure transparency in its strategic review.

“I think that this ends the war,” said one of the company’s large, long-term holders. “Since 2018, the relationship between Toshiba and its investors has been based on deep mutual distrust. For the first time in four years, I have confidence that the board is going to actually come out with decisions that are good for shareholders.”

Mistrust between management and shareholders

The biggest source of conflict has been “information asymmetry”,…

2022-06-01 19:01:46

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