Activist fund Elliott targets Toshiba by building stake

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Activist fund Elliott targets Toshiba by building stake

30 September 2021 Technology & Digitalization 0

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Hedge fund Elliott Management has built a “significant” stake in Japanese conglomerate Toshiba, adding to what people close to the company described as a “wolf pack” of shareholder activists.

The fund, which manages $48bn in assets, has held multiple meetings with the Japanese company’s board and advisers, according to people with direct knowledge of the matter. Two people close to Toshiba said Elliott’s stake did not exceed 5 per cent.

“Our investment in Toshiba reflects our strong conviction in the company’s underlying value,” Elliott confirmed in a statement to the Financial Times. “We have been encouraged by the constructive nature of our engagement with the company in recent months.”

Another person close to Toshiba said Elliott has been a shareholder in the Japanese group for “some time” and has done “considerable work”, describing the fund’s approach as “thoughtful”.

Toshiba declined to comment, saying it does not disclose discussions with individual shareholders.

Elliott’s move comes as Toshiba’s board is nearing the final stages of a pivotal strategic review, a set of measures forced upon the company following an activist-led shareholder revolt this year that ejected senior management.

Activist and special events funds are camped out in Toshiba’s shareholder register in the expectation that investors can force the company into a strategy that would significantly raise its share price.

The Toshiba shareholder list has undergone a number of significant changes over the past few months, with several of the largest holders trimming their positions after the share price touched a six-year high of ¥5,000 ($45) per share in mid-July.

The optimum prize, top shareholders have previously told the FT, would be a private equity buyout that valued the entire company at more than $30bn. Other measures could include the sale of major Toshiba subsidiaries, with the proceeds being used to fund a large share buyback.

People close to the Toshiba board have said in recent weeks that they have been engaging at “unprecedented levels” with the company’s shareholders. Several activist funds have said that, if the strategic review fails to show that the Japanese group actively pursued the possibility of a sale to private equity, they would vote against future nominations for the chief executive.

People close to two large private equity funds said, however, that they had looked at a possible buyout of Toshiba and decided against it at an early stage.

The Toshiba investment marks the latest high-profile campaign by Elliott in the Japanese market since it took a large stake in technology investment group SoftBank last year.

The fund has been looking to expand its team in Tokyo for the rich opportunities the market has recently offered amid an increase in the sale of non-core assets by Japanese companies, said people close to the discussions.