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Toshiba Asked To Officially Seek Acquirers By Conglomerate’s No.2 Shareholder

Toshiba Asked To Officially Seek Acquirers By Conglomerate’s No.2 Shareholder
Japanese conglomerate Toshiba Corp has been called upon by its second largest shareholder to conduct a strategic review and explicitly solicit suitors and said that the comments of the company of it wanting to remain listed were deterring potential acquirers.
These comments were made by the 3D Investment Partners which owns a 7.2 per cent stake in Toshiba and were made in reference to a $20 billion acquisition offer from CVC Capital Partners earlier this month. That had resulted speculations of the bidding war for the Japanese conglomerate.
CVC has not given up on its efforts to acquiring Toshiba even though the Japanese firm has rejected the offer because of alleged lack of details. According to sources bidding for Toshiba is also being considered by some other private equity investors, said reports citing sources.
"We call upon the board to openly welcome interest from suitors who could enhance corporate value and ask the board to conduct a formal review of strategic alternatives," 3D said in a letter sent to Toshiba's board on Monday and made public.
"To conduct a fair and proper process, Toshiba should explicitly indicate that it is open to alternative ownership structures and correct media speculation that Toshiba's management team and board have a strong preference for remaining a listed company," 3D said.
Toshiba has said that it was of the opinion that being listed at the stock exchange provided a "capital structure suitable for enhancing long term value creation" but also added that the various proposals for takeover, including those that want to take the company private, would not be disregarded by the board of the Japanese industrial conglomerate.
The same position was reiterated by Toshiba on Monday in response to 3D's letter.
The Japanese conglomerate was also urged to seek other offers from potential suitors by the United States based hedge fund Farallon Capital Management, which is the third largest shareholder of the company with 6 per cent stake, earlier this month.
There has however been no comment on the issue since CVC's offer was made public by Toshiba’s largest shareholder with 10 per cent stake in the company - Singapore-based Effissimo Capital Management.
According to previous reports, potential bids for acquiring Toshiba were also being considered by Bain Capital, KKR & Co Inc and Canada's Brookfield Asset Management among others.
Even though a several private equity funds had contacted one of Toshiba's main lenders for possible financing, no negotiations have been held, said a senior executive of the lenders according to reports.
If the Toshiba board fails to consider its request, it would take further action, said Singapore-based 3D in the letter. It also added that shareholders "will have no choice but to seek a more significant and ongoing role in governance".
The fair stock value of Toshiba was in excess of 6,500 yen, compared to Monday's closing price of 4,465 yen, estimated 3D.
"Shareholders will hold management accountable if they try to block these interests to buy the company," said another Toshiba investor, who could not be named because of confidentiality constraints.

Christopher J. Mitchell

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