Toshiba Corp’s second-largest shareholder demanded an emergency shareholder meeting on Thursday, to require the Japanese corporation to obtain two-thirds support before proceeding with a contentious plan to split in three.
The move by the Singapore-based hedge fund 3D Investment Partners is the latest in a long dispute between the once-mighty Japanese conglomerate and a slew of foreign shareholders, many of whom are activist funds.
In its statement, 3D expressed worries about the expense of Toshiba proceeding with the split before receiving shareholder approval. It also urged Toshiba to carry on with its strategic assessment. “There is no rationale for pursuing at great expense the separation plan without knowing whether a sufficient number of Toshiba shareholders will ultimately provide consent,” said the fund, which owns more than 7 percent of Toshiba.
3D seems to be compelling the conglomerate into holding a legally necessary vote requiring the support of at least two-thirds of shareholders, pushing it up by more than a year. Officially, the vote would not take place until the 2023 annual shareholders meeting.
Because roughly 30 percent of the stakes in Toshiba are held by foreign entities, many of which are said to be opposed to the split, 3D’s suggestion might eventually force the conglomerate to abandon its plan. Toshiba stated that it has received 3D’s proposal and is now reviewing it.
Weakened by a 2015 accounting scandal and the bankruptcy of its nuclear unit in the US, Toshiba has suggested a break-up akin to a move by General Electric Co, to concentrate attention on individual operations. Toshiba’s market value has weakened in recent years by more than half, to approximately $18 billion, from an early 2000s peak. The break-up proposal was presented in November after a five-month strategic assessment. However, 3D and other shareholders have pushed for a more concrete investigation that includes prospective private equity offers.
“Toshiba’s strategic review so far “failed to consider a full range of alternatives,” said 3D. Toshiba stated on Thursday that it is carefully contemplating its reaction since 3D’s proposal “has unexpected substance”, with the fund making a demand while stating its intention to vote against it.