Toshiba puts going private on the table

Toshiba has decided it will consider proposals to take the company private, and devise yet another strategy to improve its performance, suggesting alternative proposals for the company's future will be revealed – and perhaps decided - in late June. The beleaguered Japanese giant yesterday announced [PDF] it has created a …

[steelpillow]

Can anybody explain to a numpty?

How is going private going to help?

It is obvious that manglement suck chronically and must be first against the wall if the revolution is to succeed. But Toshiba is publicly quoted on the big Stock Exchange pond: shareholders can already replace the directors, who in turn can replace the senior manglers in line with the shareholders' wishes. How is restricting the shareholder fish to a small private pond going to change that?

Usually, on this scale of sprawling conglomerate business, going public is seen as a necessary step in escaping the limitations of the big-fisn-in-a-small pond mentality.

[Xalran]

Re: Can anybody explain to a numpty?

there's two things in your comment :

- depending on the company 'incorporation' and t(he local laws being publicly traded does not means that shareholders at large have any control over who is on the board. Ttypical examples are :

* Michelin ( Société en comandit par actions ), the biggest shareholder ( namely the Michelin familly ) gets to name the Commanditaire ( parse that as CEO ), there's a drawback though, no limited liability... if there's a hole in the accounts, the biggest shareholder has to plug it with it's own money so that the accounts are at 0 at the end of the year.

* Ericsson ( and several other Swedish companies ) have two kinds of shares, A shares and B shares. The A shares are traded on Swedish market, and nowhere else, each share brings 10 voting right. the B shares are traded in various places including USA, each one brings one vote. between them Investors AB ( Wallenberg familly holding ) and the Handelsbanken controls most of the A shares... while it represents 10ish % of the shares it represents more than 50% of the votes. ( and thus control the board )

So depending on how Toshiba has been 'incorporated' according to Japanese laws shareholders might just be there for the ride and nothing else.

- Going private brings lots of advantages : you don't have to bother with a board would be the first one.

( since said board represent the shareholders... and going private means you have a single shareholder )

the second one would be that the CEO is just an employee like any other employee, you're not happy with him/her, you fire him/her, the third would be that you define the strategy and the CEO is here to execute it ( if not, see second advantage )

Now it's true that the disadvantage is that you have a smaller investment pool ( namely your single shareholder ), but if said shareholder owns enough money ( either as a private person like Elon & co or as a company/investment group ) it's not an issue.

[steelpillow]

Re: Can anybody explain to a numpty?

The single shareholder meme is incorrect. C'm on, one individual buying up the whole vast Toshiba conglomerate? Reality check required. In fact the only difference between public and private ownership is that privately held shares are not traded on any public exchange and deals have to be cut mano-a-mano. Private investors are often venture capital or other finance companies rather than individuals, and there can be a fine mix holding shares in any private company.

Most such private companies do indeed have a board of directors, one of whose key tasks is to appoint the CEO and immediate colleagues on the management board. The idea of the vast Toshiba being dictated to Howard Hughes style is not realistic.

There are all kinds of complications over the kinds of shares held and the attached voting rights - preference shares are common in the UK and will often lack voting rights - yadda yadda yadda... . But that is wholly irrelevant to the public vs private issue.

[Anonymous Coward]

If Bane Capital (see what I did there) is involved, Toshiba will be broken up, sold off and closed down.