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Toshiba’s spin-off plan is up for a vote among major shareholders

Toshiba’s spin-off plan is up for a vote among major shareholders

Toshiba’s spin-off plan is up for a vote among major shareholders
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Toshiba shareholders will vote on a plan to split the beleaguered Japanese giant into two on Thursday, despite strong resistance from important shareholders. The vote on the proposal to spin off Toshiba’s electronic devices division is intended to gauge support before a formal resolution vote next year.

However, the management plan’s success at Thursday’s extraordinary shareholder meeting is far from certain. A vote against the spin-off would be a blow for the engineering behemoth and a rare win for activist shareholders in corporate Japan.

Toshiba, once a symbol of the country’s technological and business supremacy, has recently been hit by a slew of scandals, financial difficulties, and surprise high-level resignations. The plan to split the company in half was changed from a previous proposal for a three-way split, which was also met with strong opposition from some investors.

A spin-off, according to several large shareholders, will simply exacerbate Toshiba’s problems by establishing more managerial positions at smaller businesses, rather than enhancing the company’s governance. Following a failed takeover approach from private equity firm CVC Capital Partners last year, some people demand a buyout instead.

The spin-off proposal has been dismissed by Effissimo Capital Management, a Singapore-based investment firm that holds 10% of Toshiba’s stock. Another major stakeholder, 3D Investment Partners, asked Toshiba to consider all options, including going private.

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Farallon Capital Management said a buyout would “put an end to the spiral of mistrust and reposition the company for the future.”

Satoshi Tsunakawa, a driving force behind the spin-off proposal, abruptly resigned as CEO earlier this month after less than a year on the job. Taro Shimada, who also supports the two-way split, has taken his place.

The shareholder meeting in Tokyo starts at 10 a.m., with the results of the vote likely several hours later.

Toshiba has been held afloat by foreign investors, who have pushed for speedier growth and a more defined long-term plan.

Travis Lundy, an analyst at Quiddity Advisors who publishes on Smartkarma, told AFP that Toshiba’s “number one goal” is to “get rid of the activists, make them go away”.

“The problem is… that activists have a certain mandate,” he said.

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He added, “They need to get out with a win. Otherwise, at this point, it would be getting out with a loss, because they’ve been there for years now.”

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