Toshiba board meets amid reports of president's resignation

The board of Toshiba is meeting amid reports the president is stepping down as the technology conglomerate studies an acquisition proposal from a global fund where Nobuaki Kurumatani previously worked

Japan Toshiba (Copyright 2017 The Associated Press. All rights reserved.)

The board of Toshiba Corp. is meeting Wednesday, amid Japanese media reports that the president is stepping down as the technology conglomerate studies an acquisition proposal from a global fund where he previously worked.

Toshiba said decisions on directors will be discussed at the board meeting, and an announcement will be made, but declined to comment on the resignation.

Nobuaki Kurumatani was the head of the Japan operations of CVC Capital Partners which proposed the acquisition last week, before taking his post as chief executive of Toshiba in 2018.

Some questions had been raised, both within and outside the Tokyo-based company, about Kurumatani leading the board discussions on the acquisition.

The CVC deal, received last week, is estimated to be worth 2 trillion yen ($18 billion) and will turn Toshiba private. Toshiba said it was giving it “careful consideration.”

Trading in the company’s shares was suspended when the news hit last week. Shares of Toshiba, whose sprawling business includes making elevators and railways, shot up on the CVC news, and have been trading at about 4,500 yen ($41).

CVC is a European private equity firm, based in Luxembourg, which has committed nearly $162 billion in funds, managing more than 300 investors. It declined to comment on the acquisition proposal or the president’s possible resignation.

Kurumatani will be replaced by his predecessor, Satoshi Tsunakawa, who remains on the board as COO and currently chairman, Japanese media reports said.

Toshiba, founded in 1875, was long revered as one of Japan’s respected brands, developing the nation’s first radar and microwaves, electric rice cookers and laptop computers.

It also invented flash memory, the ubiquitous computer chips that store and retain data for digital cameras, cell phones and other gadgets. Toshiba no longer makes laptops, and it has sold its computer chips division.

Toshiba’s fortunes began to crumble over its heavy investment in nuclear power. After the March 2011 nuclear disaster in Fukushima, costs of the business ballooned because of growing safety concerns. Some nations are turning toward sustainable energy.

The nuclear power operations of U.S. manufacturer Westinghouse which Toshiba acquired in 2006, which filed for bankruptcy protection in 2017, also caused massive losses for Toshiba.

In Japan, Toshiba is decommissioning nuclear plants, including the one in Fukushima, where the tsunami 10 years ago set off multiple reactor meltdowns.

In 2015, Toshiba acknowledged it had been systematically falsifying its books since 2008, as managers tried to meet overly ambitious targets. An outside investigation found it had inflated profits and hid massive expenses.

___

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama