Toshiba Corp CEO Nobuaki Kurumatani stepped down on Wednesday amid controversy over a $20 billion buyout bid from CVC Capital Partners. The conglomerate’s shares surged on reports that KKR & Co and Brookfield were also planning offers.
Kurumatani received criticism for the bid from CVC, his former employer, as well as allegations. The management allegedly pressured investors before a shareholders’ meeting to support desired board nominations.
Once again, Satoshi Tsunakawa, who previously led the company before Kurumatani, will take the position. He had been the company’s chairman until Wednesday.
CVC offered to take the scandal-hit Japanese conglomerate private and retain incumbent management. According to sources, this was to shield Kurumatani and other managers from activist shareholders’ pressure. These shareholders have successfully pushed for an independent probe into the allegations.
The offer sparked a strong reaction from Toshiba managers and some board members. According to anonymous sources, due to the matter’s sensitivity, the backlash prompted them to lobby against it.
At a news conference, Toshiba Board Chairman Osamu Nagayama said that Tsunakawa has various stakeholders’ trust. Nagayama said that Kurumatani had told the board that he was resigning as its recovery was now firmly in place.
CVC’s April 6 proposal was unsolicited, lacked substance, and required careful consideration, Nagayama added.
Moreover, he said that Toshiba would consider setting up an independent committee of external directors after receiving a formal proposal from CVC.
Shares in Toshiba Trade 5% Higher
In Wednesday afternoon trade, Toshiba shares were trading 5% higher at 4,825 yen. According to the source, it was not too far off the 5,000 yen per share level proposal by CVC.
KKR & Co, a private equity giant, consider a buyout offer that would exceed CVC’s. Reports said it cited several people who have been briefed on the plans.
Canada’s Brookfield Asset Management Inc is in the preliminary stages of exploring an offer, reports also said.
Meanwhile, in other economic news, Bank of Japan Governor Haruhiko Kuroda offered a careful view of the economy. He said it would continue to improve as strong global demand lifts business sentiment.
According to him the fresh curbs on economic activity to deal with a resurgence in coronavirus infections were among the risks to the economic outlook.
The country’s economy has emerged from last year’s slump caused by the COVID-19 pandemic. Albeit, analysts, expect any recovery to be modest due to slow vaccine rollouts and soft consumption cloud the outlook.