Toshiba Corp's second-largest shareholder 3D Investment Partners is objecting to the group's plan to split itself into three companies and wants it to invite offers from potential buyers, according to Reuters.
In a letter to the board seen by Reuters, 3D, which owns over 7% of the Japanese conglomerate, said the proposed break-up is "extremely unlikely" to resolve any of Toshiba's current problems and "is instead very likely to create three underperforming companies in the image of today's Toshiba".
Toshiba should "open a formal process, develop a compelling plan for each of the businesses, provide detailed diligence materials and management meetings to interested financial and strategic parties, encourage and enable stretch proposals from those parties and evaluate the best path forward", the letter said.
Other hedge fund shareholders told Reuters they were disappointed that Toshiba had rejected the idea of going private.
Toshiba launched a strategic review following a scandal over alleged collusion with Japan's trade ministry to pressure foreign shareholders.
As part of the review, Toshiba held talks with private equity firms about going private, but concluded that potential offers were "not compelling relative to market expectations".
Toshiba plans to split into three companies, with one housing its energy and infrastructure divisions, another comprising its hard disk drive and power semiconductor businesses, while the third will manage Toshiba's stake in flash-memory chip company Kioxia Holdings and other assets.
The group aims to complete the overhaul by March 2024.