TOKYO: Toshiba Corp’s second-largest shareholder on Wednesday objected to the Japanese conglomerate’s plan to split itself into three companies and called on it to instead solicit offers from potential buyers.

Hedge fund 3D Investment Partners, which owns more than 7% of Toshiba, laid out its objections in a three-page letter to the company’s board, becoming the first major shareholder to formally oppose the break-up plan outlined this month.

The letter, seen by Reuters, highlights shareholder discomfort over Toshiba’s proposal - an unease reflected in the company’s recent weak stock performance - and raises the possibility that the break-up may struggle to win approval at a shareholder meeting early next year.

A Toshiba spokesperson said it does not comment on individual exchanges with shareholders. 3D declined to comment.

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,” Singapore-based 3D said in the letter.

Some other hedge fund shareholders have also told Reuters, on condition of anonymity, that they were disappointed Toshiba had turned down the idea of going private. In its letter, 3D said 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”.

Toshiba launched its strategic review after pressure from investors following a governance scandal over management’s alleged collusion with Japan’s trade ministry to pressure foreign shareholders.