Toshiba CEO Doesn’t Want Buyer to Split Up Company
Japanese conglomerate vets 10 proposals amid conflicts on the board
TOKYO—The chief executive of Toshiba Corp. TOSYY -1.04% , the Japanese industrial conglomerate that has put itself up for sale, said he wanted any buyer to keep the company in one piece to promote innovation.
The condition laid out by Chief Executive Taro Shimada could make the sale process more challenging because major global private-equity firms tend to want a free hand in slicing and dicing the companies they acquire. Some analysts have said the parts of Toshiba, which makes power turbines, elevators and semiconductors among other products, might be worth more separately than together.
Toshiba put itself up for auction in late April after shareholders rejected a plan to split the company into two. U.S. private-equity firm Bain Capital and other global firms have expressed interest in making a bid. The company said last week it has received buyout offers from eight investors and two proposals for minority investment.
General Electric Co. , long a model for Toshiba, is splitting into three tightly focused independent companies—aviation, healthcare and power. But such radical surgery has long faced resistance at Japan’s diversified conglomerates, in part because the managers and engineers are mostly lifetime employees attached to the security and prestige of a big corporate name.
In an interview, Mr. Shimada harked back to Toshiba’s heritage as an innovator, observing that it was credited with building the world’s first laptop computer in the 1980s. He said splitting the company into many parts might be efficient in a narrow sense but would deprive researchers of chances to cross-fertilize ideas.
“If we wanted to cut and slice the company, the real jewel would go away,” Mr. Shimada said.
Mr. Shimada cited a technology Toshiba is developing to deliver genetic changes to specific cells such as cancer cells. He said it was invented by a team of 10 specialists from multiple disciplines. “All those different types of top-notch researchers working together would create something completely new,” he said.
Jerry Black, the chairman of a special board committee that is reviewing bids, said he agreed that a large-scale breakup wouldn’t be in Toshiba’s best interests. He said the board needed to consider the feasibility of a buyer’s bid, and a breakup would likely run into trouble with Japan’s industry ministry.
Mr. Shimada released a new business plan last week that calls for lifting revenue by more than 50% over the next eight years. Under the plan, the elevator and lighting businesses, which the company had earlier contemplated selling, are now positioned as core businesses.
The sale process is testing Toshiba’s relationship with foreign shareholders, who own about half the company after they injected capital in 2017.
The company in May nominated new director candidates from major U.S.-based shareholders Elliott Management Corp. and Farallon Capital Management LLC.
Mariko Watahiki, a former judge who serves on Toshiba’s board, dissented on those nominations, saying that if they went through, nearly half of the board would have ties with a small group of major foreign shareholders. She said that would be unfair to other shareholders without such representation.
Mr. Black said the two were nominated based on their individual talents and would help the board assess the bids.
Shareholders will vote on the nominations at Toshiba’s annual meeting on June 28. After that, Mr. Black said the company planned to narrow down the contending bidders to a handful, who would then do more due diligence and offer legally binding bids.
He expressed hope that if the company is taken private, the new owners could transform Toshiba without having to deal with the clamor of contending shareholders and directors that has led the company into turmoil in recent years.