Japan’s best-known activist investor, Yoshiaki Murakami, announced a tender offer for Toshiba Machine Co, one of the entities embroiled in a controversial takeover battle for NuFlare Technology Inc.
The bid late from Murakami vehicle Office Support came just hours after Toshiba Machine confirmed it had agreed to tender its shares in NuFlare to Toshiba Corp for 11,900 yen apiece. The electronics maker was able to clinch the unusual bidding war, which included Murakami’s funds, even though Hoya Corp had offered to pay a higher price of 12,900 yen for each NuFlare share.
Murakami appears to be seeking to disrupt or derail the NuFlare deal, even though Toshiba said that it had secured enough shares to proceed with a takeover of NuFlare. The purchase was seen as a snub to minority shareholders because Toshiba was already NuFlare’s largest stakeholder with 52.4% when it started the buyout. Toshiba Machine, an independent company that retains the former parent’s name and is the second-largest NuFlare stockholder, had agreed sell its 15.8% stake to Toshiba.
Toshiba Machine said it had not been consulted at all in advance of the Murakami bid and that a committee would evaluate the proposal. It also said it could block the offer with the issuance of share warrants.
It’s been a busy weekend for Toshiba, which has been in almost constant turmoil since an accounting scandal erupted in 2015. The Tokyo-based company has seen executive resignations, multibillion-dollar losses in its US nuclear business and the sale of its crown-jewel memory-chip unit.
Separately on Saturday, Toshiba said that Chief Executive Officer Nobuaki Kurumatani would be taking on the additional title of president as part of a revamp of top management aimed at speeding up decision making. And in yet another announcement, Toshiba said a subsidiary called Toshiba IT-Services Corp may have misreported as much as 20 billion yen ($182 million) in sales.
The statement by Toshiba Machine did not give an offer price or an indication of how much Murakami entities were prepared to spend, but said the bid would begin January 21. Murakami funds already effectively held 11.5% of Toshiba Machine, the statement said.
Last month, Minami Aoyama Fudosan, another fund linked to Murakami, reported it had a stake in NuFlare, a provider of equipment used to make computer chips, and said it may give advice or make proposals to management. Murakami is considered one of the pioneers in Japan’s battle for shareholder rights and he put forward the first hostile takeover bid by an investor in the country.
In 2007 he was convicted for insider trading and sentenced to two years in prison, which was suspended on appeal.
Hoya offered to spend as much as 148 billion yen for NuFlare, seeking a minimum of 66.7% of the company. At the time, Hoya said it hadn’t discussed the bid with NuFlare or Toshiba in advance for fear of the information leaking out and driving up the price. Toshiba’s Kurumatani has said that NuFlare wouldn’t be able to survive outside of the group and he has no plans to sell his stake. After Toshiba’s announcement, Hoya said it would not pursue its tender any further.
“We saw it as a 50-50 chance to begin with,” said Taishi Arashida, a spokesman for Hoya. Arashida said there is still room to discuss acquisition or some kind of a partnership with Toshiba.
NuFlare dominates the market for mask writers, used for imprinting patterns on glass squares slightly bigger than a CD case that act as a stencil for semiconductor designs. Hoya is one of only two companies in the world — the other being Japanese compatriot AGC Inc. — capable of making the blank masks used in next-generation extreme ultraviolet lithography, and it sees a lot of synergy between itself and the acquisition target.
Toshiba hasn’t explained how it arrived at the offer price and it’s not clear how NuFlare fits into the company’s business portfolio, given that chip manufacturing hasn’t been core to its business after it spun off memory operations in 2018. NuFlare has said that it saw Toshiba’s bid as the best way to increase the company’s value and that the two of its 10 board directors who had connections to Toshiba group recused themselves from voting on the matter.
Kurumatani appointed Toshiba president
Toshiba Corp Chief Executive Officer (CEO) Nobuaki Kurumatani will add the title of president effective April, part of revamp among top management aimed at speeding up decision making.
Current President Satoshi Tsunakawa, who was promoted in 2016 following an accounting scandal, will resign and become non-executive chairman from April, Toshiba said in a statement on Saturday.
Kurumatani, 62, joined Toshiba in April 2018 after the electronics conglomerate decided to sell its crown-jewel memory unit to a consortium led by Bain Capital, in order to avoid delisting after billions of dollars of losses in its US nuclear energy operations. Kurumatani restored Toshiba’s dividend and bought back $6.4 billion worth of shares.
Kurumatani, who spent his entire career in banking, was only the second outsider appointed to lead Toshiba in the past 50 years, an unusual development at a conglomerate where executives typically spend decades working their way to the top. When he joined he said his mission was to revive Toshiba’s spirit of technological and entrepreneurial innovation, conceding he faced a “difficult job.”
Toshiba is adopting a new corporate officer system that “will provide key personnel who lead the development of Toshiba Group with responsibilities, authority and compensation commensurate with their achievements, and enhance their presence in external sales activities,” the Tokyo-based company said in the statement. It will add three executive officers as of April.
Separately, Toshiba is currently pressing forward with plans to take over NuFlare Technology Inc., despite a higher competing offer for the provider of critical chipmaking equipment. Toshiba was already NuFlare’s biggest shareholder with 52.4% when it initiated the buyout. Toshiba Machine Co., an independent company that retains the former parent’s name and is the second-largest NuFlare stockholder, has said it will sell its 15.8% stake to Toshiba.
In a new twist, Yoshiaki Murakami, Japan’s best-known activist investor, announced a tender offer for Toshiba Machine late on Friday.