A consortium headed by Japan Industrial Partners Inc. (JIP) is exploring a purchase of Toshiba Corp. at a value of around ¥2.4 trillion ($16.1 billion) in what might be Asia's largest acquisition this year, according to sources familiar with the situation, via Bloomberg News.
JIP Is Currently Seeking Financial Help
The JIP-led group, which is the preferred bidder to take the Japanese industrial group private, plans to provide ¥1 trillion ($6 billion) in cash while seeking financing totaling ¥1.4 trillion ($9.3 billion) from banks along with a committed line of credit of ¥200 billion ($1.3 billion) in capital investment, the insiders stated, who requested to remain anonymous as the matter is private.
The persons interviewed said that at Toshiba's usual meeting with banks on Oct. 20, including Sumitomo Mitsui Banking Corp. (SMBC), the business notified the banks that JIP was valuating the company at around ¥2.4 trillion ($16.1 billion) and requested the banks for financial help.
The increase in Toshiba's share price of around 17% this year has resulted in the conglomerate's market worth increasing to approximately $15.7 billion. As per the estimates done by Bloomberg, an offer of ¥2.4 trillion ($16.1 billion) would be equivalent to around ¥5,541 ($ 37.10) per share. This figure is comparable to Toshiba's closing price of ¥5,391 ($ 36.10) per share on Monday in Tokyo.
Sources said that JIP has not yet finalized the equity pledges from its partners, and banks continue to be hesitant about making binding promises.
The Pending Acquisition
On a story published earlier by Bloomberg News, it would be difficult for both the consortium headed by JIP and a competing group formed by the state-backed investment vehicle Japan Investment Corp. (JIC) to fulfill the deadline of Nov. 7 to line up commitment letters.
Deliberations are still taking place, and there is no assurance that the discussions will result in any kind of transaction, the insiders said. They indicated that Toshiba might still make the decision to study the possibility of selling select assets rather than selling the whole firm.
Both JIP and SMBC's spokespeople choose not to comment on the matter.
In response to a question from Bloomberg News, a spokeswoman for Toshiba said that, as a general rule, they are unable to address questions on applicants or co-investors since doing so may compromise the integrity of the selection process.
JIP's Other Negotiations
Bloomberg News previously reported that JIP is in the process of negotiating the formation of a partnership with local corporations such as Orix Corp. and Chubu Electric Power Co., in addition to global investment firms such as Baring Private Equity Asia and CVC Capital Partners. This alliance has put out a proposal that would maintain the status quo of Toshiba's existing corporate structure.
Investors such as Bain Capital and MBK Partners have reportedly explored the possibility of being engaged in JIC's competing bid group, the sources said.
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Written by Trisha Kae Andrada
