Toshiba | Unlocking Value
As one of Toshiba’s largest shareholders, owning 6.5% on October 3, 2018, King Street has used its considerable investment experience and analytical resources to evaluate Toshiba and its businesses in significant detail, including the best possible strategies for capital allocation and the implementation of the share buyback announced in June.
Capital allocation is among the most important decisions the management and Board of a company make. This is particularly true for Toshiba, which is in the rare position of having substantial net cash as it embarks on a historic business transformation. Our analysis indicates that Toshiba is severely undervalued and would generate extraordinary returns by investing in its own stock today. While Toshiba announced a ¥700 billion share buyback on June 13, 2018, continued delays in implementation threaten to significantly impair shareholder returns. Moreover, the announced amount falls materially short of Toshiba’s excess capital.
We are publicly releasing our presentation which we shared with the Company (which can be accessed in the Toshiba | Unlocking Value - Presentation section of this website) to inform Toshiba’s management, Board, shareholders and all other stakeholders of the significant value we believe will be created by an accelerated and increased share buyback of ¥1.1 trillion, which is the Company’s highest and best use of excess capital. It is critical that Toshiba implement the buyback as quickly as possible to take full advantage of this virtually unprecedented opportunity. As evidenced by recent increases in our ownership stake, we are convinced of the long-term value of Toshiba’s business and are confident in the Company’s ability to regain its status as one of Japan’s corporate crown jewels. Toshiba can become a leading example of Prime Minister Abe’s call for corporate revitalization through better governance and more efficient use of capital.