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Toshiba’s board planned to expel CEO before $ 20 billion buyout offer-Source

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Tokyo-Toshiba’s board of directors planned to expel troubled CEO Nobuaki Kurumatani before CVC Capital Partners began a $ 20 billion takeover bid last week. Two members of Toshiba’s Nominating Committee, including Chairman Osamu Nagayama, said they would meet former CVC executive Mr. Kuriya and look for a new CEO.

Mr. Kuriya then told them about plans for a European private-equity fund to make Toshiba private, the three said. The next day, the Japanese conglomerate announced that it had received the offer, two of them said.

The conference event shows how Kurumatani’s tenure was canceled by his flagged popularity, even before the offer was announced. It was the culmination of deepening disagreements between Kurumatani and activist shareholders, who expressed concern that they said they were a governance issue.

Plans to dismiss him appear to have accelerated after the April 6 meeting at Toshiba’s headquarters adjacent to Tokyo Bay. Toshiba said Wednesday that it had resigned after a former Sumitomo Mitsui Financial Group banker had taken command for about three years.

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Support for him has diminished both internally and among investors, one explained the issue. Due to the confidentiality of the issue, we refused to identify all sources.

“In a survey of Toshiba executives, support for Kuriya was low,” he explained. There was his “deep distrust” among shareholders, he said.

Toshiba said Kurumatani has resigned on Wednesday. He says he is doing so to “recharge” and after achieving his plan to revive the conglomerates weakened by the accounting scandal.

Reuters could not immediately contact Kurumatani for comment on the story. Nagayama declined to comment. Toshiba said it could not comment on speculation. The representative of CVC JAPAN declined to comment.

Issue escalation

Kurumatani, who joined Toshiba from the Japanese division of CVC in 2018, vowed to reorganize a company with a vast 150-year history, is a renowned company that had been struggling for decades before its management arrived in the executive suite. Then he was a rare outsider.

The challenge to him escalated last month when activist investors won a vote at the emergency shareholders’ meeting and established an independent investigation into whether management had previously put pressure on shareholders against shareholder votes.

Previously, Toshiba’s internal probe had not found a failure.

The vote was convinced that Kuriya’s board was unlikely to get support at next year’s shareholders’ meeting, said a second person who explained the issue. At the last shareholders’ meeting, he won only 57% of the votes. This is a bitter rebuke in a country where management rarely disagrees.

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His resignation could undermine the chances of a CVC dominating Toshiba. This was the end of an attempt to shed light on management’s decisions.

Toshiba executives are lobbying against CVC proposals with government officials. Government officials say the company needs to approve the deal because it manufactures nuclear reactor manufacturers and defense equipment.

“It’s a deal no one wants. Toshiba has a variety of defense-related businesses, and foreign ownership can lead to a customer outflow,” he said.

Japanese media reported on Wednesday that CVC plans to stick to the takeover bid, offering a premium 30% higher than Toshiba’s current share price. Hong Kong-based activist fund Oasis Management has accused it of being too low, and US hedge fund Farallon Capital Management has asked Toshiba to seek other bids.

For now, Satoshi Tsunakawa, 65, who joined Toshiba in 1979, manages the company, including dealing with CVCs and other potential bidders. These may include US investment firm KKR and Canada’s Brookfield Asset Management Inc, according to a Financial Times report.

A source familiar with Toshiba’s internal discussions said, “There is a shortage of internal candidates for the top post, but it will be difficult to attract outsiders after removing them.” ($ 1 = 109.6600 yen)

(Report by Makiko Yamazaki, Noriyuki Hirata, Takashi Umekawa, Written by Tim Kelly, Edited by David Doran and Raju Gopara Krishnan)

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Toshiba’s board planned to expel CEO before $ 20 billion buyout offer-Source

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