Toshiba to hold extraordinary meeting in March on new split plan

[TOKYO] Toshiba will hold an extraordinary shareholder meeting next month to gain feedback from investors on its revised separation plan, setting the stage for a showdown with activist stock holders that may oppose the Japanese conglomerate's restructuring proposal.

The meeting will be held on Mar 24, the Tokyo-based company said in a statement Monday (Feb 14). A vote on the plan to split won't be legally binding and will be adopted by an ordinary resolution, it said, requiring a simple majority to pass.

The proposal is likely to be approved because of this, said Justin Tang, the head of Asian research at United First Partners in Singapore.

A legally binding vote on the separation will take place next year, the company said.

The meeting comes after Toshiba announced last week that it would divide into 2 companies, scrapping an initial 3-way split that faced fierce criticism from activist shareholders.

Toshiba now plans to spin off its devices business, which includes semiconductors, and sell non-core operations in areas from air conditioning to elevators and lighting. The company denied last week that the change was due to pressure from shareholders, saying instead that the new plan would be smoother and save money.

Two proposals by shareholder 3D Investment Partners will also be voted on at the meeting, Toshiba said. The first is to partially amend the company's articles of incorporation to push ahead with the company split, or any other reorganisation supported by the board and its strategic review committee, if approved. The second calls for the strategic review committee to ensure all alternatives to the reorganisation plan are fully considered.

Toshiba's board opposes both proposals, it said.

Toshiba, once among Japan's most revered companies, has been in crisis mode for years due to repeated scandals and management missteps. It invented flash memory for computing, but had to sell control of its crown jewel semiconductor business to pay for a disastrous expansion in nuclear power.

That deal opened the door to activist investors who have pushed for change. They include Effissimo Capital Management and 3D, which are the 2 largest shareholders with 10 per cent and 7.6 per cent stakes respectively, according to data compiled by Bloomberg.

3D, which has yet to comment on the revised separation proposal, had been calling on the company to reopen negotiations with private equity firms on selling the company, rather than going ahead with plans to split. BLOOMBERG