Toshiba Adds Activist Board Members In Shift Toward Privatisation

Toshiba has appointed two board members from activist hedge fund investors, lending momentum to the possibility of privatisation, although the company’s chief executive insisted the firm would study all options.

Shareholders approved the appointments of Eijiro Imai of Farallon Capital and Nabeel Bhanji of Elliott Management to the board, along with 11 other new and re-appointed board members, in a contentious annual general meeting on Tuesday that saw angry investors shouting at management and disrupting executives’ presentations.

“We believe management and shareholders can share the same footing by welcoming Imai and Bhanji to the board,” said chief operating officer Goro Yanase.

Buyout offers

Toshiba said earlier this month it has received eight buyout offers and two offers of capital alliances that would see it remain listed.

The company is seeking a way forward after years of accounting and mismanagement scandals that began in 2015.

Its efforts have been hobbled by poor relations with investors, who in March voted down both reorganisation proposals presented by management, leaving the company without a clear way forward.

The appointments of Imai and Bhanji may restore confidence with activist investors, but external board member Mariko Watahiki earlier this month publicly criticised the move as giving too much board influence to activists.

Investor fracas

Retail investors at the meeting questioned whether the activist funds’ interests were aligned with what was good for the company over the long term.

External board member George Raymond Zage, who chairs the appoinment committee that made the nominations, said Toshiba consulted law firms to review conflicts of interest.

“One of the major issues that we’ve had as a company is a lack of trust between our large shareholders and management, and this was an attempt to address that,” he said before the meeting.

Chief executive Taro Shimada responded to shareholders opposing privatisation by saying that the company would thoroughly study all options.

Due diligence

Initial bids have been received from KKR & Co, Baring Private Equity Asia, Blackstone, Bain Capital, Brookfield Asset Management, MBK Partners, Apollo Global Management and CVC Capital Partners, according to reports.

Shares in Toshiba have risen 20 percent since the beginning of the year, in part on news that it was reviewing privatisation bids.

The company said it is planning to create a shortlist of bidders in time for it to begin due diligence from July.