THE ASAHI SHIMBUN
April 14, 2021 at 17:30 JST
The sudden resignation of Nobuaki Kurumatani as head of Toshiba Corp. will likely lead to a more cautious approach to the recent buyout proposal by British private equity firm CVC Capital Partners, sources suggest.
Kurumatani submitted his resignation as president and CEO at an emergency Toshiba board meeting held on April 14, days after the conglomerate received the buyout offer.
Company sources said outside board members were planning to submit a motion to remove him from his post, and some Toshiba executives view his resignation as being prompted by pressure from board members.
While Toshiba will still have to consider the buyout offer even after Kurumatani departs, a major premise behind the bid was to resolve the struggle between Kurumatani and activist foreign investment funds that make up some of the company’s major shareholders.
But with Kurumatani out of the picture, that confrontation may not be as pronounced.
When the buyout offer was received on April 6, those close to Kurumatani described it as a “white knight” move designed to help him get around the confrontational relationship with other major shareholders.
The CVC Capital Partners buyout proposal would take Toshiba private. As Toshiba was going through the process of delisting, the thinking was that the major shareholders opposed to Kurumatani would sell off their stakes in the company, sources said.
But such moves are no longer needed now that Kurumatani is no longer at the helm.
Toshiba executives have also raised concerns about taking the company private.
“There are many negative aspects, such as further procuring funds for corporate management,” one said.
Toshiba is expected to set up an in-house task force next to study the buyout offer, as well as to form a special committee made up of experts to deliberate on the proposal.
Satoshi Tsunakawa, the company chairman who stepped aside as president when Kurumatani took over in April 2020, is set to replace Kurumatani at the helm.
There is no apparent opposition to having Tsunakawa return to his former role as Toshiba’s president. At last year’s shareholders meeting, Tsunakawa received the support of about 90 percent of shareholders to serve as chairman.
Tsunakawa became Toshiba president in June 2016 before being replaced by Kurumatani and taking on the chairman’s post.
In late 2017, Tsunakawa decided Toshiba should receive capital injections from about 60 foreign investment funds, including a number that subsequently took issue with Kurumatani’s corporate management.
Kurumatani had formerly served as vice president of Sumitomo Mitsui Financial Group before becoming Toshiba chairman in April 2018.
He was named to the post at a time when Toshiba was reeling from an accounting scandal, as well as huge losses relating to its U.S. nuclear unit, Westinghouse Electric Co.
In April 2020, Kurumatani became company president, the first in about 50 years who did not come up through the Toshiba ranks.
As company president, he succeeded in meeting many corporate goals, leading to Toshiba’s return to the Tokyo Stock Exchange’s First Section in January 2021 after it had been demoted to the Second Section about three and a half years before.
At the same time, activist shareholders raised concerns about corporate governance issues.
For example, when suspect transactions were uncovered in January 2020 at a subsidiary, some major shareholders sought answers. That led to turbulence at the July 2020 shareholders meeting, when Kurumatani received support from only about 58 percent of shareholders to remain in his post.
Moreover, some shareholders pointed out the July 2020 meeting was conducted inappropriately and demanded a third-party investigation.
At an extraordinary shareholders meeting in March, a majority voted in favor of a proposal by the leading shareholder to conduct that investigation. Shareholders are still waiting for the outcome of that probe.
Company employees have voiced frustrations over the heavy-handed manner in which Kurumatani led the company.
The fact that Kurumatani also headed the Japanese unit of CVC Capital Partners for about a year before he became Toshiba chairman raised questions about the recent buyout offer and may have contributed to the mounting pressure against him.
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