All the messes in Toshiba on the offer of Cvc

All the messes in Toshiba on the offer of Cvc

Toshiba CEO Kurumatani resigns due to potential conflict of interest a week after the Japanese company received the purchase offer from the CVC fund (where Kurumatani had previously worked )

Issues of conflicts of interest at the top of Toshiba.

The CEO of the Japanese conglomerate Nobuaki Kurumatani has resigned.

The decision comes after the confrontation within Toshiba's board over the preliminary acquisition offer from the private equity fund CVC Capital Partners, where Kurumatani had previously worked as a boss for Asia.

In 2018, the board of directors of Toshiba – forced to look for an outsider to lead the group – had nominated Kurumatani as president of the Japanese division of CVC.

Nobuaki Kurumatani's decision was taken for granted due to a potential conflict of interest and doubts raised about the transparency of the operation.

Despite the turmoil at Toshiba, the company's shares rose 8% on Wednesday to their highest level since April 2015. When the company was embroiled in an accounting scandal that triggered six years of crisis for the Japanese empire.

All the details.


In place of Kurumatani will succeed Satoshi Tsunakawa, who, in an online conference, reiterated the priority of restoring a sense of greater trust within the board.

Tsunakawa – Kurumatani's successor – said he will work to build "favorable ties" with the company's activist investors and aims to hand over the CEO role to younger generations in the near future.


In the final statement explaining the reasons for his resignation, Kurumatani mentioned the need to have more free time after the completion of the restructuring of the company and the recent arrival on the stock market.

So no mention of the financial transaction forwarded by CVC, which ended up breaking the board, costing him his job.


At the same conference, chairman of the board, Osamu Nagayama, said the proposed $ 20 billion acquisition lacks specific details. Therefore, an exact estimate of the offer is currently impracticable on these values.

The offer of the CVC fund was to make the Japanese conglomerate private and to keep the management in office.


But the offer was perceived as designed to protect Kurumatani from activist shareholders who successfully pushed for an independent investigation, according to Reuters sources.


Separately, private equity firm Kkr & Co. is exploring a rival offering for Toshiba, Bloomberg reports. Kkr's offer is likely to value Toshiba more than the 2.3 trillion yen purchase proposal it has already received from CVC.

Canadian investment giant Brookfield Asset Management Inc. is also in the early stages of exploring an offer for the company, according to a Bloomberg source.

"The perspective, combined with the fact that CV's offer is now lower than Kkr's and that CVC has no experience with deals of this magnitude, probably means it's out of the game," according to Smartkarma analyst Mio Kato .


Finally, any operation requires the green light of the Tokyo government. Since Toshiba controls activities in the defense sector, in addition to the procurement of nuclear power plants, it is subject to strict parameters related to national security.


In recent years, the company has been embroiled in accounting scandals. Toshiba also recorded large losses on investments in the nuclear sector, particularly in the United States.

Factors that led to the sale at the end of 2017 of the profitable division active in semiconductor memories to the US consortium Bain Capital. After a long restructuring phase and gradual improvement of the accounts, Toshiba returned to listing on the Tokyo Stock Exchange (TSE) main listing at the beginning of the year.

This is a machine translation from Italian language of a post published on Start Magazine at the URL on Wed, 14 Apr 2021 13:03:32 +0000.