CEO resigns in wake of $20bn CVC approach
Shares shoot up as bidding war looms
Toshiba Corp chief executive Nobuaki Kurumatani resigned yesterday amid controversy over a $20 billion buyout bid from CVC Capital Partners and the conglomerate’s shares surged on reports that KKR & Co and Brookfield Asset Management Inc are also planning offers.
Chairman Satoshi Tsunakawa will once again assume the helm.
Kurumatani had been under fire over the bid from CVC, his former employer, as well as damaging allegations that investors were pressured before a shareholder meeting to support desired board nominations.
CVC’s offer to take the scandalhit Japanese conglomerate private and retain incumbent management was perceived as designed to shield Kurumatani from activist shareholders who have successfully pushed for an independent probe into the allegations, sources familiar with the matter have said.
The offer sparked a strong backlash from Toshiba managers, prompting them to lobby against it to the government, said one of the sources.
The sources declined to be identified due to the sensitivity of the matter.
“Tsunakawa has the trust of various stakeholders,” Toshiba board chairman Osamu Nagayama told a news conference, adding that Kurumatani had told the board that he was stepping down as the company’s recovery was now firmly in place.
People familiar with matter said, however, that two board members had told Kurumatani they planned to oust him due to his slumping support among shareholders and staff, and that the CVC offer had only accelerated the move.
Nagayama said CVC’s April 6 proposal was unsolicited, lacked substance and required cautious consideration.
He noted that a law which restricts foreign ownership in Japanese companies with important technology would have to be taken into account.
Toshiba would consider setting up an independent committee of external directors after receiving a formal proposal from CVC, Nagayama added.
Tsunakawa, who has a reputation for being on better terms with Toshiba’s large activist shareholder base, said the
company needed to rebuild trust with investors and acknowledged there was room to improve governance.
The Toshiba shareholder vote last month for an independent probe was a watershed victory for corporate governance in Japan, marking the first time that a motion by an activist shareholder has won approval at a major company.
Both Nagayama and Tsunakawa suggested current management did
not intend to be place for too long.
“I am aiming to complete my mission quickly and hand over to the next generation,” Tsunakawa said.
Shares in Toshiba closed 6% higher at 4,860 yen, which compares with the 5,000 yen per share level that a source has said was proposed by CVC.
Other suitors appear to be waiting in the wings. Private equity giant KKR & Co is considering a buyout offer
that would exceed CVC’s, the Financial Times has reported, citing several people briefed on the plans.
Canada’s Brookfield is in the preliminarily stages of exploring an offer, Bloomberg News reported, citing a person with knowledge of the matter.
A representative for KKR Japan declined to comment. Brookfield did not immediately respond to a request to comment.