There is growing opposition to Toshiba Corp’s proposal to split into the two companies, with another influential proxy advisory firm coming up against the plan.
Glass Lewis & Company urged investors to vote against the plan because the process it relied on “clearly questionable logic” and sidelined investor backlash and private equity buyout interest. Instead, the company favored “a complicated, costly and poorly reasoned three”. Glass Lewis said in his report on Thursday that it instead split in two, a “-way split” before changing his plan soon after.
The advisory firm also recommended investors support the proposal of active investor 3D Investment Partners Ptey for Toshiba to initiate a new strategic review to explore other options, including the sale of the company.
“We believe investors have been provided with clear reason to decline further investigation of the plan, as it is currently structured, and support a new process,” Glass Lewis said.
Glass Lewis’ recommendation echoes that of another major shareholder advisory firm, Institutional Shareholders Services Inc., which came out against Toshiba’s plan on Wednesday. ISS argued that shareholders should vote against 3D’s proposal for a further strategic review, however, the company’s annual general meeting is expected to take place in three months, allowing governance issues to be addressed then.
Activist investor Efisimo Capital Management Ptey, which is Toshiba’s largest shareholder, holding about 10% stake in the company, also spoke out against the plan on Thursday, saying such a divestiture would be irreversible and could be harmful in the long term. .
A representative for Toshiba was not immediately available for comment on Glass Lewis’ recommendation. The company said earlier on Thursday that it would continue to do everything possible to convince its proposal to gain the support of shareholders in response to protests from the ISS and Efisimo.
The matter will go to the shareholder’s vote in a special meeting to be held on March 24.
Last month, Toshiba scrapped an offer to split into three listed companies, choosing instead to split into two. The original plan faced stiff opposition from big shareholders, including 3D.
Instead, the company intends to spin off its devices business, which includes semiconductors, and list it, arguing that a two-way split would be cheaper and easier to build than the original plan. The company said at the time that Toshiba would sell a 55% stake in the air-conditioning business to Toshiba Carrier Corp. to its US joint venture partner, Carrier Global Corp., for about 100 billion yen ($861 million).
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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