Toshiba director nominations could pave the way for sale • The Register

Toshiba has appointed two directors from activist hedge funds to its board, which could tip the balance in favor of a sale that would put the company in private hands.

Shareholders of the Japanese conglomerate voted to support all 13 director nominations recommended by the company at the annual general meeting of shareholders held in Tokyo on June 28.

These included two directors of hedge fund investment firms, a controversial move that led to the resignation of outside director Mariko Watahiki, a former Supreme Court judge who allegedly protested her appointment on the grounds that it skewed board membership in favor of activist investors .

The two directors in question are Eijiro Imai, managing director at Farallon Capital Management, and Nabeel Bhanji, senior portfolio manager at Elliott Management. Also from the investment world is Akihiro Watanabe, managing director of US investment bank Houlihan Lokey, who has been appointed chairman of the board.

In an opinion [PDF] of Toshiba’s management ahead of the vote, the company said that the addition of Imai and Bhanji to the board “would strengthen alignment between shareholders and management” as the two are representatives of major shareholders and the company believed they would compare themselves to the valuation as Various strategic alternatives faced by the company from this perspective would prove useful and would “facilitate the transparency of the evaluation process”.

According to Reuters, Farallon and Elliott together own about 10 percent of Toshiba, with activist shareholders estimated to own a total of about a quarter of the company’s stock.

Toshiba announced back in April that it was considering proposals to take the company into privatization after numerous scandals and pressure from various investor groups to take steps to restore confidence following them.

It was reported last week that Toshiba had received 10 potential offers to buy the company, eight of which would privatize the company, with some estimates putting the value of the deals at up to $22 billion. Toshiba shares are said to have risen by up to 6.5 percent after the news.

Previous reports had identified a number of potential investors interested in buying some or all of Toshiba, including Bain Capital, currently the largest shareholder in spin-out storage company Kioxia, CVC Capital Partners and KKR.

Last year, Toshiba was hit by its third major corporate governance scandal in six years, with allegations that the company was conspiring with the Japanese government to minimize the influence of foreign investors. Events like these led to pressure from many shareholders to turn the company around, leading to the current selling moves. ® Toshiba director nominations could pave the way for sale • The Register

Chrissy Callahan

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