Toshiba chief exec quits, shares surge on bidding war reports

CEO facing flak over ex-employer CVC's bid and claims investors pressured before meeting

CVC's bid to take Toshiba private and retain the management was seen to be designed to shield Mr Nobuaki Kurumatani from shareholders who have pushed for an independent probe. PHOTO: AGENCE FRANCE-PRESSE
CVC's bid to take Toshiba private and retain the management was seen to be designed to shield Mr Nobuaki Kurumatani from shareholders who have pushed for an independent probe. PHOTO: AGENCE FRANCE-PRESSE

TOKYO • Toshiba CEO Nobuaki Kurumatani resigned yesterday amid controversy over a US$20 billion (S$26.7 billion) buyout bid from CVC Capital Partners and the conglomerate's shares surged on reports that KKR & Co and Brookfield are also planning offers.

Mr Satoshi Tsunakawa, who led the company before Mr Kuruma-tani and until yesterday was chairman, will take the helm again.

Mr 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 scandal-hit Japanese conglomerate private and retain incumbent management was perceived as designed to shield Mr Kurumatani from activist shareholders who have successfully pushed for an independent probe into the allegations, said sources familiar with the matter.

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 Mr Kurumatani had told the board he was stepping down as the firm's recovery was now firmly in place.

People familiar with the matter said, however, that two board members told Mr 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.

Mr 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, he said.

Mr Tsunakawa, who is reputed to be on better terms with Toshiba's large activist shareholder base, said the company needed to rebuild trust with investors.

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 Mr Nagayama and Mr Tsu-nakawa suggested current management did not intend to be in place for too long. "I am aiming to complete my mission quickly and hand over to the next generation," said Mr Tsunakawa.

Shares in Toshiba closed 6 per cent higher at 4,860 yen, which compares with the 5,000 yen per share level that a source has said was proposed by CVC.

REUTERS

A version of this article appeared in the print edition of The Straits Times on April 15, 2021, with the headline 'Toshiba chief exec quits, shares surge on bidding war reports'. Subscribe