Toshiba shareholders on Thursday voted against a proposal to split the Japanese conglomerate into two, dealing a fresh blow to management that will likely spell further turmoil for the embattled company.
The results of the ballot held at an extraordinary shareholder meeting are non-binding, but Toshiba had been hoping to shore up support ahead of a final vote next year on the plan to spin off its electronic devices unit.
The result is the latest setback for the engineering giant, which was once a symbol of Japan’s tech and business prowess but has faced a series of scandals, financial troubles and shock high-level resignations in recent years.
A proposal by a key Singapore-based shareholder to explore alternatives including going private was also rejected, however, highlighting the deadlock between management and activist investors over the future of the company.
“Our company will review any and all strategic options in order to increase our corporate value, taking into account the opinions expressed by shareholders,” CEO Taro Shimada said at the end of the meeting.
Details of how many votes each proposal received will be announced at a later date in a special report after both failed to receive majority support.
The plan to divide Toshiba in two was revised from an earlier idea for a three-way split, which also met stiff opposition from some investors.
Several major shareholders argued that a spin-off would only add to Toshiba’s woes by creating more managerial posts at smaller units, rather than improving the firm’s governance.
And some want a buyout instead, following an abandoned takeover offer last year from private equity fund CVC Capital Partners.
Singapore-based Effissimo Capital Management, which owns 10 percent of Toshiba’s shares, had come out against the spin-off plan before the vote, while Farallon Capital Management said a buyout would “put an end to the spiral of mistrust and reposition the company for the future”.
Satoshi Tsunakawa, a key figure behind the spin-off proposal, abruptly stepped down as CEO earlier this month after a brief tenure of less than a year. He was replaced by Shimada, who backs the two-way split.
Foreign investors have kept Toshiba afloat, but have also pushed for faster growth and a clearer long-term strategy.
Travis Lundy, an analyst at Quiddity Advisors who publishes on Smartkarma, told AFP before the vote that Toshiba’s “number one goal” is to “get rid of the activists, make them go away”.
“The problem is… that activists have a certain mandate,” he said.