Toshiba sets March date for preliminary vote on break-up plan

Reuters

18:37 JST, February 14, 2022

TOKYO (Reuters) — Japan’s Toshiba Corp. said on Monday it plans to hold an extraordinary general meeting of shareholders on March 24 where it will seek initial approval to hive off its devices business.

The final, legally-binding vote to determine whether to break up the 146-year-old conglomerate won’t happen until next year but the meeting next month will be an important gauge of shareholder support for the board’s restructuring plan.

Toshiba’s plan has been criticized by some foreign hedge funds who own stakes in the company.

Singapore-based 3D Investment Partners has submitted a separate proposal for the meeting, calling on Toshiba to explore other options and solicit buy-out offers from private equity firms and potential strategic buyers.

Both proposals would need approval from just over half of shareholders, Toshiba said.

CEO Satoshi Tsunakawa told a news conference that a two-way split could in theory be carried out with just board approval under legislation recently revised to expedite breakups.

The company is opposed to 3D’s proposal. The strategic review committee, which consists of five independent outside directors, has already conducted “a thorough and rigorous review,” it said in a statement.

Toshiba believes that the discussions between some committee members and several private equity funds “provided a meaningful perspective on the price level at which the private equity funds believed a privatization could be accomplished,” it added.

If the breakup plan fails to win majority support, however, all options including a deal to take the company private would be considered, Tsunakawa said.

Toshiba proposed this month to split off the business that includes its power chips and hard disk drive units, rejigging an earlier plan to break into three companies – one for devices, one for its energy and infrastructure businesses and another to house its Kioxia flash memory chip assets.

A deal to take Toshiba private is seen as a potentially greater windfall for shareholders, including the foreign activists that now own nearly 30% of the company.

On Monday, Toshiba posted an operating profit of 42.7 billion yen ($369.85 million) for the October-December quarter, up from 20.9 billion yen a year earlier.