Opposition to Toshiba breakup grows as major shareholder and proxy company speak out

A staff member bows to a shareholder (not pictured) arriving at the venue for Toshiba Corp’s annual general meeting with its shareholders in Tokyo, Japan, June 25, 2021. REUTERS/Kim Kyung-Hoon

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TOKYO, March 10 (Reuters) – The top shareholder of Toshiba Corp 6502.T and an influential proxy advisory firm joined a growing list of investors on Thursday who oppose the Japanese company’s plan to split and dismantle the 146-year-old company. old conglomerate.

It is the latest in a long battle between the once mighty tech company and a number of its overseas shareholders as it tries to revive itself after years of accounting scandals and governance issues.

Toshiba will organize an extraordinary general meeting on March 24 to submit to the vote its plan to split into two, initially drawn up after a five-month strategic review.

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Effissimo Capital Management, which has a roughly 10% stake in Toshiba, said in a statement it decided to vote against the plan, which has been criticized by other hedge fund shareholders who favor a sale to a capital firm. -investment.

The Singapore-based fund called on Toshiba to establish a trustworthy management team first, saying the current management and board are not capable of crafting “a strategic plan with such irreversible and far-reaching consequences. “.

The plan “could ultimately hurt Toshiba’s medium to long-term business value,” he said.

Separately, proxy advisory firm Institutional Shareholder Services (ISS) advised against the breakup plan in a report dated Thursday.

“Years of turbulent corporate governance…a divided shareholder base and an uninspiring management track record raise significant skepticism about whether the current plan is superior to a privatization proposal,” said ISS.

ISS also recommended shareholders vote against a proposal by second largest shareholder, Singapore-based 3D Investment Partners, that Toshiba would explore other options and seek buyout offers from private equity firms.

The proposal to direct the board to more explicitly consider a sale of the company “seems too prescriptive and premature given the three months remaining before the company’s annual meeting of shareholders”, he said. .

Toshiba said in a statement that it would continue to make every effort to explain its proposal to shareholders to gain their support.

Toshiba appointed an interim chief executive earlier this month after shareholders raised concerns that management appeared unable to proceed with the company’s restructuring plan in a timely manner. Read more

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Reporting by Makiko Yamazaki; Editing by Raju Gopalakrishnan and Elaine Hardcastle

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