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Toshiba urged to exit TEC

January 3, 2019

Toshiba’s headquarters in Tokyo, Japan

A Hong Kong activist fund has requested that the Japanese OEM sheds its “non-core” businesses in order to boost the margins of the conglomerate.

Having already announced its withdrawal from both its British nuclear power and US LNG wings, Argyle Street Management is now suggesting Toshiba walks away from businesses such as office machinery division Toshiba TEC, The Business Times reports.

Both of these previous withdrawals were prompted by a drive to regain the confidence of investors, following the much-publicised accounting scandal of 2015 which drew attention to widespread financial irregularities.

“We believe that further firm commitments to divest other non-core businesses (such as Toshiba TEC for instance), would be well received and affirms management’s commitment to decisive execution of its plans,” Argyle Street Management declared in a letter to Nobuaki Kurumatani, the OEM’s CEO.

Argyle Street Management is also calling for Toshiba to boost share buybacks to ¥1.1 trillion ($10.21 billion/€8.95 billion), describing its present ¥700 billion ($6.49 billion/€5.7 billion) repurchase as “grossly insufficient” and claiming the higher buyback would be justified by “the current depressed share price of Toshiba.”

In a further demand, Argyle Street Management has called on the OEM to hire more board members with international experience: “As a long-term shareholder of Toshiba, we may feel the need to propose an agenda item at the AGM next year should we feel that our suggestions have not been given due consideration.”

Previously, Argyle Street Management opposed the sale of Toshiba’s chip business, to a consortium led by Bain Capital, on the grounds that the prized unit was “undervalued.”

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