By Makiko Yamazaki
TOKYO (Reuters) – Japan’s Toshiba Corp plans an extraordinary general meeting of shareholders on March 24, to seek their initial approval to hive off its devices business, the company said on Monday.
The final, legally binding vote to determine whether to break up the 146-year-old conglomerate will not happen until next year, but next month’s meeting will be a key gauge of shareholder support for the board’s restructuring plan.
Toshiba’s plan has been criticised by some foreign hedge funds with stakes in the company.
Singapore-based 3D Investment Partners has submitted a separate proposal for the meeting, urging Toshiba to explore other options and solicit buyout offers from private equity firms and potential strategic buyers.
The company is opposed to 3D’s proposal.
The board chose the break-up plan over buyouts after a thorough review that involved talks with private equity firms over conditions and pricing for a potential deal to take the company private, Chief Executive Satoshi Tsunakawa told a news conference.
If the breakup plan failed to win majority support, however, all options will be considered, including a deal to take the company private, Tsunakawa said.
Such a deal is seen as a potentially greater windfall for shareholders, including the foreign activists that now own nearly 30% of the company.
Reuters has reported that Toshiba walked away from potential private equity buyout offers at a substantial premium, as well as advanced talks for a minority stake from Canada’s Brookfield.
The proposals of both the board and 3D would need approval from just over half of shareholders.
This month, Toshiba proposed to split off the business that includes its power chips and hard disk drive units, rejigging an earlier plan to break into three companies – one each for devices, its energy and infrastructure businesses and another for its Kioxia flash memory chip assets.
Sources at several shareholders told Reuters they saw the changes as simply a way for Toshiba management to skirt investor opposition, although the company has repeatedly denied this.
The previous three-way breakup plan, which envisaged offloading of a much larger share of assets, would have required approval from two-thirds.
Toshiba posted on Monday an operating profit of 42.7 billion yen ($369.85 million) for the October-December quarter, up from 20.9 billion yen a year earlier.
But it trimmed its full-year profit forecast by 9%, to 155 billion yen, blaming soaring costs of materials and semiconductor shortages.
($1=115.3700 yen)
(The story corrects spelling of “next” in paragraph 2)
(Reporting by Makiko Yamazaki; Editing by Jacqueline Wong and Clarence Fernandez)
