Toshiba shareholders reject rival plans for group’s future

Toshiba shareholders voted on Thursday against competing proposals on the Japanese conglomerate’s future, rejecting one put forward by the company’s management and another backed by activist shareholders.

Management’s plan to spin off Toshiba’s device unit and activist proposal to pursue takeover bids failed to garner the necessary 50% of votes to pass.

Opposition to Toshiba’s plans to spin off the company was widespread, and its failure is no surprise. The odds of approving 3D Investment Partners’ proposal for Toshiba to pursue takeover offers or a minority stake investment were not so clear.

While 3D and Toshiba’s other two major shareholders supported the bid for a takeover bid, consultancy Institutional Shareholder Services (ISS) did not recommend the plan, saying the proposal “seems overly premature”.

Speaking at the end of the extraordinary general shareholders’ meeting, Toshiba’s new chief executive, Taro Shimada, a former Siemens executive, said only that the company would “consider several strategic options”.

Toshiba shares closed down 0.5% after the results of the meeting.

For some observers, the results represented a major setback for activist hedge funds.

Some shareholders also said they expect one or two major investors to nominate their own representatives to the board at Toshiba’s annual shareholders meeting in June to get the company to solicit takeover bids.

During last year’s five-month strategic review, Toshiba held discussions with private equity firms but decided not to encourage potential offers.

The company also walked away from advanced talks to sell a minority stake to Canadian firm Brookfield Asset Management, sources said, adding that private equity firms Toshiba held talks with included KKR and Bain Capital.

Toshiba argued that the potential purchase offers were unattractive.