Toshiba shareholders to endorse all proposed directors

The logo of Toshiba Corp. is displayed on the company's facility building in Kawasaki, Japan.

TOKYO Reuters -- Toshiba Corp's shareholders are expected to endorse all proposed directors, including two from its hedge fund investors, on Tuesday in a move that could mark a turning point for the 146 year-old Japanese conglomerate and hasten a potential buyout.

The company has nominated executives from Elliott Management and Farallon Capital Management to be outside directors at its annual general meeting, a move designed to end a long-running battle between the company and activist investors.

Glass Lewis and Institutional Shareholder Services Inc ISS are some influential proxy advisers that have recommended voting for their appointments.

The proposal has not been without hitches and critics. External Director Mariko Watahiki, a former high court judge, has objected to the candidates put forward by Elliott and Farallon, saying the presence of the pair on the board would skew it toward activist investors.

Several domestic asset managers who own Toshiba shares told Reuters they agree with Watahiki's view. The scope of the shareholders of Elliott and Farallon is probably narrower than ours, said one, referring to the funds' interest in supporting a buyout over a longer-term strategic approach.

However, Watahiki's objection is unlikely to amass support to reject the nominations, a person familiar with the matter said, speaking like asset managers on condition of anonymity because the matter was private.

After shareholders voted down a restructuring plan, Toshiba is exploring strategic options, and has become more receptive to the idea of being taken private, according to hedge fund shareholders.

The shareholders are expected to join the board's special committee in charge of an ongoing strategic review, according to Toshiba. If they are voted in, attention would turn to whether director Watahiki, who serves on the committee, would retain that role.

Toshiba received eight initial buyout proposals this month, as well as two proposals for capital alliances that would see it remain listed, according to a statement by the company.

The bidders are considering offering up to 7,000 yen $51.84 per share to go private, valuing the deal at up to $22 billion, although the pricing range was wide and various conditions have been attached to it.

Toshiba's shares were at 5,707 yen on Monday, giving it a market value of $18 billion, having risen 21% since the beginning of the year.