© Reuters. FILE PHOTO: The Toshiba Corp. logo is seen at the company’s facility in Kawasaki, Japan.
By Makiko Yamazaki and Scott Murdoch TOKYO (Reuters) – Toshiba Corp’s second-largest shareholder asked the Japanese conglomerate to undergo a strategic review and explicitly solicit suitors, saying potential buyers were deterred by the company’s comments about its desire to stay on the list. The comments from 3D Investment Partners, which owns a 7.2% stake in Toshiba (OTC :), come as a $ 21 billion buyout offer from CVC Capital Partners earlier this month has raised expectations of a war. of offers by the Japanese company. While Toshiba scrapped that offer citing a lack of details, CVC has not thrown in the towel and sources have said other private equity investors are also considering making offers. “We call on the board to openly welcome the interest of 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 the board. from Toshiba on Monday and it was made public. “To conduct a fair and proper process, Toshiba must explicitly state 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 company that it is publicly traded, “3D said. The industrial conglomerate has said it believes that going public provides an “adequate capital structure to enhance long-term value creation,” but added that its board would not rule out various proposals, including those to privatize the company. In response to a request for comment on the 3D letter, Toshiba reiterated that stance on Monday. “This letter may be the starting point of a multi-party dialogue … other shareholders certainly feel the same way, and publicly addressing the board puts them in a bind,” Quiddity Advisors analyst Travis Lundy told Reuters, writing in Smartkarma. “I expect more shareholders to submit similar letters” Earlier this month, US hedge fund Farallon Capital Management, Toshiba’s third-largest shareholder with a stake of around 6%, also asked the Japanese conglomerate to look for other offers of possible suitors. Singapore-based Effissimo Capital Management, Toshiba’s main shareholder with a stake of around 10%, has not commented since CVC’s offering was made public. Bain Capital, KKR & Co (NYSE 🙂 Inc and Canada’s Brookfield Asset Management are also looking at possible offers for Toshiba, Reuters reported. A senior executive at one of Toshiba’s top lenders said several private equity funds have contacted his bank for potential financing, but no talks are ongoing. In the letter, Singapore-based 3D suggested it would take further action if Toshiba’s board does not consider its request, saying shareholders “will have no choice but to pursue a more significant and continued role in governance.” He estimated the fair value of Toshiba’s shares at more than 6,500 yen. Toshiba shares closed 1.3% higher on Monday at 4,465 yen, compared with the 0.2% gain for the Tokyo stock market overall. “Shareholders will hold management responsible if they try to block these interests to buy the company,” said another Toshiba investor, who could not be identified due to confidentiality restrictions.