Farallon Capital Management joins Effissimo Capital Management for Toshiba EGM

On Friday, U.S. hedge fund Farallon Capital Management stated it has asked Toshiba Corp to convene an Extraordinary General Meeting (EGM) over its investment strategy. This is the second such call for an EGM in a week by major Toshiba investor.

With the call, Farallon, which owns a more than 5% stake in Toshiba, joins top shareholder Effissimo Capital Management, which has a 9.91% stake, in calling for an EGM.

Farallon wants Toshiba to seek approval from shareholders over what it said is a change in investment strategies.

In recent weeks, Toshiba had announced a plan to use nearly $9.66 billion (one trillion yen) for large-scale mergers and acquisitions in marked contrast to the strategy that “focused on a disciplined capital policy and targeted growth through organic expansion and small-scale, programmatic M&A,” said the fund said in a statement.

It went on to add, Toshiba has a poor M&A track record and that it recorded $17.4 billion (1.8 trillion yen) of impairment losses in the last 20 years as a result of “heedless growth investments.”

In a statement Toshiba’s spokeswoman said, the company is aware of the fund’s announcement and will make a regulatory filing once it officially receives the request.

Effissimo’s call for an EGM underscores its efforts to bring increased clarity on Toshiba’s M&A activity even as it launched a team of legal experts to investigate Toshiba’s annual general meeting (AGM) wherein the voting rights of several shareholders were allegedly compromised.

According to a previous report, an adviser to the Japanese government had told the Harvard University endowment fund that its vote at Toshiba’s AGM could be subject to a regulatory probe should it vote against the firm’s management.

($1 = 103.5200 yen)

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