[Asia Economy Reporter Kwon Jae-hee] Nobuaki Kurumatani, President and CEO of Toshiba Corporation in Japan, will resign as of the 14th. The resignation is analyzed to be due to the deepening conflict between CEO Kurumatani and activist investors over the sale of Toshiba. Additionally, it has been reported that besides the UK-based investment fund CVC Capital Partners, the large US private equity firm KKR (formerly Kohlberg Kravis Roberts) is also reviewing a proposal to acquire Toshiba.
According to the Nihon Keizai Shimbun on the 14th, Toshiba will hold an extraordinary board meeting on the same day to discuss CEO Kurumatani's position, citing multiple sources. It is known that CEO Kurumatani himself will express his intention to resign. As a successor, Chairman Satoshi Tsunakawa will return as CEO. Chairman Tsunakawa plans to work on restoring relations through dialogue with activist investors.
Earlier, the Toshiba situation was thrown into turmoil when CVC Capital Partners made an acquisition proposal to Toshiba. CVC proposed acquiring 100% of Toshiba's management shares and delisting the company. The background for the acquisition push is analyzed to be the conflict between Toshiba and its current major shareholders. Previously, when Toshiba’s US nuclear power subsidiary suffered huge losses and faced a management crisis, Toshiba implemented a third-party allotment of shares worth 600 billion yen in 2017. Because of this, the shareholding ratio of activist investors increased.
Activist funds such as Epsisimo Capital Management, a Singapore investment fund that participated in the capital increase, have been in conflict with Toshiba management over executive appointments and dividend policies. Against this background, at the regular shareholders' meeting held last year, the approval rate for CEO Kurumatani’s reappointment dropped by more than 40 percentage points from 99% in 2019 to 57% in 2020.
On the same day, Bloomberg News reported that the US-based large private equity firm KKR is reviewing an acquisition proposal. According to major foreign media, KKR proposed a purchase price exceeding $20 billion, signaling a major upheaval in the Toshiba acquisition battle.
Bloomberg News analyzed that "a competition for Toshiba’s acquisition will unfold."
It is also known that the Canadian investment company Brookfield Asset Management has begun its review.
Earlier, CVC Capital Partners reportedly proposed an acquisition to Toshiba at 5,000 yen per share.
The acquisition price including a management premium is approximately 2.3 trillion yen (about 23 trillion won). However, shareholders currently holding Toshiba shares are expressing dissatisfaction with CVC’s acquisition offer.
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