The board of directors of Toshiba Corp. issued astatement Friday followingCVC Capital Partners’ offer to privatize the Japanese conglomerate, warning that the proposal is preliminary and cannot lead to a transaction. The shares fell.
The CVC offer is not legally binding and many details have yet to be worked out, said Osamu Nagayama, President advice. Any deal also requires extensive regulatory reviews and CVC should organize a consortium to match funding.
“We anticipate that such a funding process would be time consuming and involve complexity to consider,” Nagayama said. The directors will conduct a “careful consideration of the initial proposal when it is clarified at a later stage”.
Toshiba shares slipped 5.4% in trading on Friday. The board also said the CVC’s proposal was “totally unsolicited and not initiated by Toshiba.”
The company revealed this week that CVCmade a buyout offer from its public shareholders. The preliminary proposal is 5,000 yen per share, or about 2.28 trillion yen ($ 20.7 billion), Bloomberg News reported.
An acquisition by a foreign buyer can prove difficult as the company has been considered an icon of Japan and several of its activities havestrategic importance for the country. Its nuclear unit, for example, is involved in the dismantling of the destroyed Fukushima Dai-Ichi nuclear power plant. Toshiba is also the largest shareholder in memory-chip maker Kioxia Holdings Corp.
Given the sensitivity around the Toshiba bush, government approval would be needed for the deal, Chief Cabinet Secretary Katsunobu Kato said.
In addition, Toshiba this week reappointed Satoshi Tsunakawa, currently president of the company, as an executive to make him deal with its largest shareholder.Effissimo Capital Management, according to people familiar with the matter.
The council approved the decision at a meeting on Wednesday, the people said, asking not to be identified as the case is private. The move will give Tsunakawa a more central role as the tech icon navigates the wave of deal negotiations.
Tsunakawa became chairman of the conglomerate in June 2016 and led the company’s restructuring efforts after its large-scale accounting scandal before handing over to Nobuaki Kurumatani in 2018. Tsunakawa stepped down as executive representative last year. .
The Singapore-based Effissimo fund has stepped up pressure on Toshiba in recent months, including forcing the company to hold an extraordinary general meeting of shareholders in March. At that event, Toshiba shareholders approved the company’s request for an independent inquiry into the director appointments at last year’s annual meeting of shareholders – despite opposition from Toshiba management.
This vote was seen as a blow to Kurumatani. Effissimo has hired lawyers to investigate these appointments.
A Toshiba spokeswoman declined to comment on the board’s decision.
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