Toshiba’s second-biggest shareholder calls for EGM to fight separation plan


Toshiba’s plan to break itself into three companies faces early derailment after one of its largest investors demanded an extraordinary meeting to vote on the split and revive talks with potential buyers to take the whole conglomerate private.

The request for the EGM was delivered to Toshiba on Thursday by Singapore-based fund 3D Investment Partners, its second-biggest investor with a 7.6 per cent stake, setting the Japanese conglomerate on course for another potentially bruising clash with activist shareholders.

The EGM request was structured in a way that would allow shareholders to vote directly against the proposed three-way split, a plan that several of the company’s largest investors have refused to accept as a legitimate option.

Toshiba’s plan would divide the group into three separately-listed businesses: a devices company; an infrastructure business; and a holding company that would deal with its interests in semiconductors and memory chips.

The friction with shareholders arose from the conclusions of a strategic review committee that Toshiba was forced to create last year by investors who demanded the 140-year-old group consider a range of options to revive its fortunes.

In November, the SRC recommended the split, arguing that it had not received convincing indications of a buyout offer. But shareholders said they believed at least two buyers had discussed valuations for a take-private option that were no less than 25 per cent higher than Toshiba’s share price in December.

Since Toshiba’s management backed the separation plan, 3D and other big shareholders have become increasingly frustrated that the company did not intend to give investors a direct mechanism to vote on the proposal.

They are also worried that Toshiba has not clarified when or on what terms it would convene its own promised EGM, at which the proposal would be on the table for discussion.

Shareholders who collectively held more than 30 per cent of Toshiba’s stock told the Financial Times last month that they would vote against the split if given the option. The plan would require the backing of a two-thirds majority of shareholders, but the vote is not scheduled to take place for two years.

3D’s main proposal would give shareholders an immediate facility to vote against the plan, which would require Toshiba’s articles of incorporation to be amended in order to implement the split recommended by the SRC and approved by the board.

If the ranks of the opposition reached more than one-third of shareholder votes, Toshiba would be forced to acknowledge that it was pursuing a plan that lacked the requisite support.

3D said it would vote against this proposal.

But a second proposal by 3D calls on the SRC to continue its review and actively engage in discussions regarding a take-private transaction or minority investment in the company.

“3D is gravely concerned that the strategic review process that resulted in the separation plan was inadequate because it failed to consider a full range of alternatives,” the fund said.

Toshiba said: “It is true that we have received a letter from 3D and are currently examining it.”

Other investors in Toshiba said an EGM request at this stage was likely to serve mostly as a negotiation tactic. The company’s management already suffered a defeat at the hands of its shareholders in 2021, and is reluctant to risk a repeat of the experience if there are compromises to be made, said managers at two other Toshiba shareholders.


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