March 27, 2023: On Thursday, Toshiba Corp’s board agreed on a buyout proposal from people led by private equity company Japan Industrial Partners, valuing the firm at 2 trillion yen, the company said.
A successful agreement would see the scandal-ridden industrial conglomerate taken private and properly into domestic hands after much tension with overseas activist shareholders.
However, it still needs to be determined whether activist funds, estimated to have roughly a quarter of the firm, will be satisfied with the terms.
Sources have stated that a few 20 Japanese firms, including financial services company Orix Corp, chipmaker Rohm Co <6963.T> and Chubu Electric Power, decided to participate in the deal. It would be the third-biggest M&A transaction internationally so far this year, according to Refinitiv data.
“This ends months of uncertainty regarding whether an agreement was coming and years of uncertainty regarding Board understanding of the right price,” analyst Travis Lundy of Quiddity Advisors stated, who publishes on Smartkarma.
“This would give a lot of activists a way out, even if it is not what they wished for. If ‘Toshiba Fatigue’ is strong enough to overcome the lowest price.”
Since 2015 Toshiba, a sprawling conglomerate owning 40.6% of memory chip maker Kioxia Holdings, has been battered by accounting scandals and heavy losses and came near to being delisted before being engulfed in a series of corporate governance scandals.
At one of its lesser points, a shareholder-commissioned investigation concluded Toshiba had come with Japan’s trade ministry – which sees the firm’s nuclear and defence technology as a strategic plan to block overseas investors from acquiring influence at its 2020 shareholder meeting.
Eventually, the fallout from that debacle led to the strategic review and the buyout proposal.
Toshiba began an auction process about a year ago, receiving eight initial buyout proposals and two offers for capital alliances.
Sources said four bidders proceeded to a double round, including private equity company Bain Capital, CVC Capital Partners and Brookfield Asset Management.
JIP started teaming up with state-backed Japan Investment Corp (JIC) but talked to part ways due to disagreements more than whether management should be retained and restructuring plans.