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Toshiba president resigns amid controversy over CVC buyout offer


Toshiba Corp. President and Chief Executive Officer Nobuaki Kurumatani resigned on Wednesday, and Chairman Satoshi Tsunakawa was appointed to succeed him, according to a company announcement.

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The resignation comes amid controversy over a takeover bid this month from British investment fund CVC Capital Partners. Kurumatani once served as chairman of the fund’s Japanese subsidiary.

Toshiba hopes the change in leadership will bring an end to the tumult.

The leadership reshuffle was decided at an extraordinary board of directors meeting on Wednesday. According to the company, Kurumatani offered to step down. He also resigned from the post of director. Outside board members had called for Kurumatani’s dismissal at the meeting.

Recently, Kurumatani had been at odds with Toshiba’s major shareholder over appointments of board members and business strategies.

At the annual shareholders’ meeting last summer, only about 57% of shareholders voted in favor of reappointing Kurumatani as director, an unusually low percentage, and his reappointment at this summer’s shareholders’ meeting had been in doubt.

Frustration had also been growing within the company. Every year, a committee of outside directors conducts a confidence survey on the president among senior management members. In the latest survey, a majority of respondents said they had no confidence in Kurumatani as president, according to sources.

The initial proposal presented by CVC on April 6 was to acquire all of Toshiba’s shares for about ¥5,000 per share, subject to the approval of Toshiba’s management and government authorities.

The proposal stated that Toshiba would have more management freedom as it would no longer be subject to pressure from activist shareholders, who impose strict orders on the company.

Kurumatani served as the chairman of CVC’s Japanese subsidiary until March 2018. The proposal could have been interpreted as a helping hand to Kurumatani, who was in a tight spot.

Critics have cited concerns about a potential conflict of interest as Kurumatani might have been in contact with CVC officials to protect himself.

Kurumatani also served as vice president of Sumitomo Mitsui Banking Corp., Toshiba’s main creditor.

Following the post of chairman at CVC Japan, Inc., he was appointed as Toshiba’s chairman and CEO in April 2018 and as president and CEO in April 2020.

Toshiba has proceeded with management restructuring through measures such as liquidating unprofitable businesses and cutting costs.

In January this year, the company returned to the Tokyo Stock Exchange’s First Section.

Toshiba’s business performance deteriorated sharply after accounting irregularities came to light in 2015 and its U.S. nuclear power subsidiary filed for bankruptcy. Turmoil has rocked the company ever since, with several changes at the top over a short period.

Published : April 15, 2021

By : The Japan News/ANN