Toshiba restructuring plan faces hurdle as activist builds stake in unit

Shibaura Machine

10/12/2019 09:24

By Makiko Yamazaki and Sam Nussey
    TOKYO, Dec 10 (Reuters) - Toshiba Corp's  6502.T  ownership
restructuring plan faces a challenge, with activist investor
Yoshiaki Murakami building a stake in a unit that the
conglomerate aims to buy out, potentially making it sweeten an
offer.
    Toshiba announced last month it plans to take full ownership
of chip-making equipment maker NuFlare Technology  6256.T  and
two other units through tender offers at a total cost of about
200 billion yuan ($1.84 billion).  urn:newsml:reuters.com:*:nL4N27T1NF 
    Regulatory filings show that funds backed by Murakami,
Japan's most prominent activist shareholder, have built a 6.2%
stake in NuFlare since Toshiba announced the tender offer for it
on Nov. 13.
    Toshiba, which already owns 52.4% of NuFlare, has offered
11,900 yen for each NuFlare share. While NuFlare's board has
endorsed the offer, Toshiba Machine  6104.T , NuFlare's second
largest shareholder with a 15.8% stake, has yet to decide
whether to tender, holding the key to the success of Toshiba's
buyout.
    Murakami-backed funds also own a total of 9.2% of Toshiba
Machine making them the largest shareholder of the former
Toshiba unit. Toshiba holds just 2% of Toshiba Machine, having
sold the bulk of its stake during a management crisis in 2017.
    Murakami could push Toshiba to bump up its tender offer,
which ends Dec. 25, or to pressure Toshiba Machine to use its
windfall from the deal, said Travis Lundy, an independent
analyst who writes on the Smartkarma platform. 
    The Murakami funds declined to comment on NuFlare. They have
not publicly commented on whether they plan to ask Toshiba to
sweeten its offer.
    A Toshiba spokeswoman said the company is closely monitoring
the situation but has no plans to change its offer.
    A spokesman for Toshiba Machine said the company is in talks
with Toshiba on NuFlare, but nothing has been decided. He also
said the company has regular dialogue with investors, but cannot
comment on communications with specific investors.
    Activist shareholder activity is rising in Japan, with
overseas investors sitting on Toshiba's board following
accounting scandals and a management crisis at the conglomerate.
 
    Toshiba's bid to buy the units is a major step to moving on
from the crisis, as it aims to reallocate resources to focus on
growth drivers.
    A former bureaucrat, Murakami famously led a fund targeting
Japanese companies and pushing for greater shareholder returns
until he was convicted of insider trading in 2007. He has since
resurfaced as an investor, working with his daughter.
($1 = 108.6400 yen)

 (Reporting by Makiko Yamazaki and Sam Nussey; Additional
reporting by Junko Fujita; Editing by Muralikumar Anantharaman)
 ((Makiko.Yamazaki@thomsonreuters.com; +81-3-4563-2805;))