Toshiba shareholders have today voted against two rival proposals, one from the company’s management and another introduced by a group of shareholders.
The management-backed plan involved splitting the company into two separate entities, whilst the alternative proposal fronted by shareholder 3D Investment Partners called for the company to invite a buyout. Both proposals failed to get the required 50% backing.
The company’s proposal would have seen Toshiba and Infrastructure Service Co kept as one entity, with Device Co spun out on its own. Toshiba interim CEO Satoshi Tsunakawa confirmed last month this was the direction the company saw as the best way forward.
“After further engaging with key stakeholders and completing the additional analysis, we determined that separating Toshiba into two standalone companies and divesting certain non-core assets is in the best long-term interests of our company and its shareholders, customers, business partners and employees,” said Tsunakawa, who stepped back from the interim role following the appointment of new CEO Taro Shimada.
The plan had been met with vocal opposition from shareholders prior to the vote, making the result not particularly unexpected. A number of investors stated that they didn’t feel the company had done enough to solicit a buyout proposal, a solution they believe would allow them to exit their investments with profit in a shorter timescale.
The result is a continuation of a battle between management and foreign shareholders that has already dragged on for almost five years. The company invited foreign investment, selling some 600bn yen of stock to raise funds following the bankruptcy of its US nuclear power unit in 2017. The relationship has been far from harmonious though, and activist hedge funds have been at loggerheads with company chiefs since the start of their financial interest in the firm.
The brewing tensions between the two sides exploded into scandal last year, when a shareholder-commissioned report found that Toshiba had colluded with Japan’s trade ministry to nullify investor influence at its 2020 shareholder meeting.
The vote called by Toshiba was non-binding, but the company said it would respect the result. CEO Taro Shimada was tight-lipped on the direction the firm would take, saying only that they would “consider various strategic options”.
Shares of Toshiba were up slightly before the vote, but fell 0.5% following the result.