Toshiba Corp said Chief Executive Officer Nobuaki Kurumatani will be replaced by Chairman Satoshi Tsunakawa, an abrupt leadership reshuffling that casts doubt on potential buyout offers for the $20 billion Japanese icon. Toshiba said the changes are effective immediately in an announcement Wednesday. The company will soon begin considering successors for Tsunakawa, who returns to the CEO job he held previously, said Osamu Nagayama, chairperson of the board, during a press conference in Tokyo.
The decision came as factions within the conglomerate mounted resistance to a preliminary buyout offer from CVC Capital Partners — where Kurumatani previously worked as Asia chief. Some executives felt the offer undervalued a storied Japanese corporation that still held valuable energy and semiconductor assets, according to people familiar with the matter, who declined to be identified discussing internal issues. Separately, private equity firm KKR & Co. is exploring a rival offer for Toshiba, Bloomberg News reported.
“The optics, combined with the facts that CVC’s bid is now supposedly lower than KKR’s, and that CVC lacks experience with deals of such scale, probably mean it is out of the running,” said Mio Kato, an analyst who publishes on Smartkarma.
Nagayama, the Toshiba board chairperson, said he isn’t sure whether Kurumatani’s resignation will affect talks with CVC because the offer is “very preliminary and not formal.”
The company’s shares rallied as much as 8.2 per cent after news of KKR’s possible bid, but then gave up some of those gains to trade 4.4 per cent higher.
Kurumatani suffered a sharp drop in support among the company’s executives and other employees. Employees who have confidence in the CEO fell to less than 60 per cent in an internal January poll, down from more than 90% last year, Bloomberg News reported this week. More than 20 per cent expressed a lack of confidence in his leadership, up from less than 5 per cent previously.