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Toshiba Corp. is struggling to draw up a credible growth strategy as pressure from activist investors persists even after British investment fund CVC Capital Partners’ buyout plan fell apart.

While CVC effectively withdrew its bid for Toshiba, the acquisition attempt may embolden the activist investors, who own a combined 25% stake in the electronics and machinery giant, ahead of its general shareholders meeting in June.

In a statement released after CVC suspended its offer, Toshiba said it is “now commencing a fresh review of measures to increase corporate value.”

However, the company is struggling to find a growth driver after it streamlined operations to focus on infrastructure services.

Toshiba sold many successful units, such as its semiconductor memory and medical equipment businesses, during a business crisis caused by massive accounting fraud and the collapse of a U.S. nuclear power subsidiary.

As a result, Toshiba’s sales for fiscal 2019 stood at only ¥3.3 trillion, down by half from its heyday.

Toshiba places its infrastructure operations, such as those related to power plants, at the heart of its business. But a source at an investment fund said that it is difficult to achieve high growth under a business model focused on infrastructure.

The Toshiba Corp. headquarters in Tokyo's Minato Ward | KYODO
The Toshiba Corp. headquarters in Tokyo’s Minato Ward | KYODO

Toshiba is seeking to achieve growth through its renewable energy operations. The market for offshore wind farms, however, is already controlled by a handful of powerful players.

It has also turned to data business for growth, but it is expected to take time before that can begin to turn a profit.

Without a credible growth strategy, Toshiba cannot expect its stock price to rise or activist shareholders to ease their pressure.

After CVC offered to buy Toshiba at ¥5,000 a share, Hong Kong investment fund Oasis Management Co., another Toshiba shareholder, said the appropriate price would be over ¥6,200.

On Thursday, Toshiba closed at ¥4,350 on the Tokyo Stock Exchange’s first section.

Although Toshiba’s new president, Satoshi Tsunakawa, promised on April 14 to build trust with stakeholders, his words rang hollow without a detailed growth plan.

Even after CVC’s pullout, Toshiba faces unabated pressure.

Other investment funds are mulling buyout plans, and meanwhile a report on whether its 2020 regular shareholder meeting was held in a fair manner will be drawn up by its next shareholders meeting in June. The report was sought by Toshiba top shareholder Effissimo Capital Management Pte., another activist investor.

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