More trouble for Toshiba: a key investor opposes its split into three

Toshiba announced a few weeks ago that planned to split the company into three independent companies, as a measure to end the reputational crisis suffered after a scandal that affected its management. Furthermore, with this step he hoped to invite shareholders to leave. But everything seems to indicate that it will not be so simple. since according to The Register a key Toshiba investor flatly refuses to split.

It is an investment fund that owns about 7% of the shares of the company. Therefore, it is its second largest shareholder. And he not only opposes the division, but he is calling for a review of the strategic alternatives that were considered and discarded before opting for the division of the company in three. For it, 3D Investments, which is the name of the fund, has written an open letter to the company that begins by ensuring that the «execution failures and misplacement of capital»Are due to the lack of transparency of the board of directors, which according to the fund has damaged the credibility of the company.

3D Investments has also noted that Toshiba’s Strategic Review Committee has failed in its attempt to find a plan, with evidence from an 8% decline in its share price that the plan to split the company is not a good one. idea. But everything indicates that their greatest anger lies in the fact that they assure that the committee was very quick to reject a strategic agreement with a multinational private venture capital fund, because according to them they did so to avoid the inconveniences of supervising these types of entities.

This shareholder emphasizes that «by their own admission, the SRC did not provide detailed information to, or be met with, private investment funds. Nor did he request or receive sales proposals from the company, or for any of its parts. It appears, judging from the committee’s report, that neither strategic partners nor potential buyers were contacted. So instead of examining all the possibilities and reporting all of them to shareholders, the committee has decided that the status quo, with a minor step from divisions to different entities, is the solution for success, despite years evidence to the contrary«.

For 3D Investments, the plan will result in «three underperforming companies instead of the current Toshiba image“And believes that with some more robust changes Toshiba could improve its performance and reputation. So they urgently beg to scrap the plan and go back to the beginning, opening a formal process and developing a plan for each of the divisions. Also that “offer detailed due diligence materials, and steering meetings with strategic and financial stakeholders, encourage and enable proposals from these parties, and assess the best way forward for Toshiba in light of competitive proposals that we are confident will be made«.

The plan that the investor strongly opposes would see Toshiba continue to sell printers, barcode kits and POS terminals, in addition to selling 40% of memory maker Kioxia, a spin-off of Toshiba. The proceeds of the sale would then be passed on to the shareholders.

Another of the companies would focus on devices and inherit Toshiba’s hard drive and semiconductor divisions. And a third would handle power generation, IT solutions, batteries, and other infrastructure products and services. But in view of the opposition of this investor and others that have not been so explicit externally, it will be necessary to see what happens in the future with the plans of the company.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *