Toshiba CEO’s sudden resignation casts doubt on $ 20 billion CVC deal

Toshiba chairman of the board questioned The $ 20 billion buyout proposed by CVC Wednesday, as the Japanese conglomerate confirmed the sudden resignation of its chief executive.

the Departure of Nobuaki Kurumatani follows unprecedented shareholder rebellion, management defeat clash with militant funds and signs of a significant division within Toshiba’s board of directors over the approach taken by CVC Capital Partners and other private equity funds.

The submission of CVC’s preliminary proposal last week raised the possibility that Toshiba would be deprived of what would be Japan’s largest debt buyout. Although a person close to Toshiba’s board of directors said that CVC’s proposal “looks absolutely serious” and contains an appropriate level of detail, attention has focused on Kurumatani’s previous role in as head of CVC for Japan and the presence of a senior advisor of the European buyout group on the board of directors of the conglomerate.

“CVC claims it will submit a more detailed proposal, but it is impossible to assess the proposal at this point,” Osamu Nagayama, chairman of the board of Toshiba, said at an online press conference. “The initial proposal indicates that management will be maintained. With the resignation of Mr Kurumatani, we don’t know what they are thinking now.

A person close to the Luxembourg-based fund added that there was no clarity on the “next move of CVC”.

Atsushi Akaike, the head of CVC in Japan, was not immediately available for comment.

Despite the unrest at Toshiba, the company’s shares rose 8% on Wednesday to their highest level since April 2015, just before the company was caught in a massive accounting scandal that sparked a six-year reputation crisis and financial.

Investors said the share price would remain high with the prospect of Toshiba being “on the line” as a potential buyout target, with high expectations that KKR and others could enter higher bids than CVC in the weeks to come. to come up.

Toshiba’s board said it had appointed Satoshi Tsunakawa to replace Kurumatani. Tsunakawa, who was also Kuramatani’s immediate predecessor, made the decision in 2018 to issue $ 5.4 billion worth of new shares in a move that crammed the ledger of one of Japan’s most famous companies with aggressive foreign shareholders.

Nagayama sought to deny that Kurutamatani’s resignation followed a coup sparked by opposition to CVC’s candidacy, saying personal reasons were behind the decision to resign. In a statement read at the press conference, Kurumatani said he wanted to spend more time with his family after “completing” his mission to revive Toshiba.

Tsunakawa and Nagayama made multiple references to Toshiba’s “successful” return to the Tokyo Stock Exchange’s first section in February after his three-and-a-half-year demotion to second section as punishment for his accounting scandal. The return was made possible by a historic change in TSE rules.

According to several people close to the company, the president belonged to factions within Toshiba that were not happy with the way Kurumatani was running the company and dealing with the militants.

Tsunakawa, 65, said he would work to establish “favorable links” with the company’s activist investors and intended to hand over the role of managing director to the younger generation in the near future.

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