Toshiba Corporation now faces vague immediate direction as shareholders knock back two rival proposals.
Accordingly, the management plans to spin off the firm’s devices unit, while a separate call backed by activist shareholders seeks buyout offers.
However, both proposals failed to secure 50.00% of the vote. The spin-off scheme received a support rate of 39.53%.
Subsequently, opposition to the plan is widespread. This includes Toshiba’s three most prominent investors and proxy shareholder advisory firms.
Meanwhile, the other plan from Singapore-based 3D Investment Partner garnered 44.60% support.
Toshiba’s second-biggest shareholder, which owns over 7.00% of the company, has called to solicit private equity buyout offers.
Accordingly, the direction of Toshiba’s management is now an open question. Analysts expected the company to revise its restructuring plan.
Meanwhile, several experts anticipated sales of some assets such as Toshiba Tec, making point-of-sale systems and copiers.
Moreover, the results represented a significant setback for the activist hedge funds.
Nevertheless, reports mentioned that these shareholders still plan to force the company to restart talks with private equity firms.
Then, they also expect top investors to nominate their own representatives for the board at Toshiba’s shareholder’s meeting in June.
The make-up of the company’s board is a critical focal point. Criticisms widely spread that the management conducted a flawed strategic review which led to the break up of plans.
Last year, Toshiba held discussions with private equity firms but decided not to entertain potential offers. It argued that the approaches were insufficiently compelling.
At the same time, it walked away from advanced talks for a minority stake from Canada’s Brookfield Asset Management.
Toshiba has been under pressure from activist funds since it sold $5.00 billion of stock to dozens of foreign hedge funds.
Toshiba CEO Shimada sees hopeful prospect
Meanwhile, Toshiba’s just-installed chief executive, Taro Shimada, sees a silver lining amid the crisis in the company.
The uncertainty allowed him to kep businesses pivotal to his digital strategy that predecessors had planned to sell.
This will give Shimada a space for his plan to boost subscription revenue by tying software to hardware. At the same time, he could hang onto equipment maker Toshiba Tec.
Leading manufacturers currently take steps into higher-margin digital services. For instance, rival Hitachi transformed itself a decade ago by selling off its low-growth businesses.
In addition, it invested heavily in its digital and services platform. Last year, it bought US software firm GlobalLogic for $9.60 billion, including debt.
Similarly, Siemens wants to expand its customer base through digital services that improve factories, buildings, and train systems.
Meanwhile, it is still not sure if Shimada could appease the hedge funds that own around 30.00% of the business.
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