On March 24th this year, the Japanese conglomerate plans to split itself into two at the shareholders meeting. Toshiba’s largest shareholder, Effissimo Capital Management said on March 10, they will oppose the vote.
Apparently, a crisis of faith occurred on the board to create a strategic plan. The Singapore-based fund owning 10.4% of Toshiba is one of them. They say that the separation can significantly hurt Toshiba’s medium to long-term corporate value. They also urge the company to restore trust from shareholders and other stakeholders by appointing a proper leadership team.
Moreover, there has been another criticism regarding the sale or private equity firm preference. Other hedge funds were concerned about it and therefore criticized the preference. If privatization is not properly explored, two-way spin-off is a premature decision, argued U.S. hedge fund Farallon Capital Management.
Many attempt to advise investors to oppose the plan. Some of them are Proxy advisors Institutional Shareholder Services (ISS) and Glass Lewis. In a report, ISS criticized that significant skepticism raised regarding a split shareholder base and uninspiring management track record. It is to question whether the current plan is superior to a proposal on privatization.
Toshiba’s core review received comments from Glass Lewis saying that it is overtly narrow. The review is also not transparent enough to engage with investors that the current plan is desirable. Last month, the Japanese tech giants owing to accounting scandals and governance problems scrapped a proposal to split itself into three listed companies. They even plan to spin-off its business for Tokyo Listing Stock Exchange in the upcoming 2023.
3D Investment Partners, Toshiba’s second largest shareholder, appeared to oppose the plan. It believes that plan does not contribute value for shareholders. Therefore, Toshiba remains to find trust restoration for its shareholders and other stakeholders.