Toshiba, a scandal-hit Japanese technology manufacturer, has accepted a tender offer from Japan Industrial Partners for a value of 2 trillion yen ($15 billion), marking a significant milestone in the company's turnaround efforts, according to a report by AP on Friday, March 24.
If the plan is granted, the business would be able to delist from the Tokyo Stock Exchange and go private. Despite the favorable development, foreign activist investors who own a sizable portion of Toshiba's shares may not be pleased with the bid's acceptance, as noted by AP.
The logo of Japanese industrial group Toshiba is seen on top of a building at its headquarters in Tokyo on February 9, 2023.
Japanese Partners
The bid, which was accepted by Toshiba's board at 4,620 yen ($36) per share, was made by Japan Industrial Partners, a buyout fund comprising major banks and companies.
The deal would keep Toshiba's business in Japan in collaboration with Japanese partners, and the consortium includes approximately 20 Japanese companies, including financial services firm Orix Corp., electronics manufacturer Rohm Co., and megabanks such as Sumitomo Mitsui Banking Corp.
According to reports from Japanese media, Japan Industrial Partners has invested in several big-name companies as well such as NEC, Sony, Hitachi, and Olympus.
Toshiba has undergone significant challenges in recent years, with an accounting scandal in 2015 and troubles in its nuclear energy business.
The company's US nuclear arm, Westinghouse, filed for bankruptcy in 2017 after incurring significant losses due to large safety costs.
In 2011, an earthquake and tsunami severely damaged the Fukushima nuclear plant, which is also being decommissioned by Toshiba.
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Leadership Changes
Toshiba has gone through several leadership changes over the years as the business, formerly known for making home appliances, laptops, batteries, and computer chips, has come under the scrutiny of overseas activist shareholders.
In recent years, the corporation has attempted to go private with plans to divide into three and then two companies, both of which were voted down by shareholders. Toshiba may get rid of the activist investors if it was delisted.
The plan still has to pass regulatory reviews in several nations, including the US, Germany, Vietnam, and Morocco. This process is estimated to take many months, according to AP.
Considering the possible advantages, it is unclear if Toshiba would be able to get back on its strong growth track. In contrast to an earlier expectation of a profit of 190 billion yen ($1.5 billion), the company this month revised its profit forecast for the fiscal year through March downward to 130 billion yen ($1 billion).
As a manufacturer of telegraph equipment, Toshiba was founded in 1875, and the name has long been associated with the strength of Japan's manufacturing industry.
Although Toshiba continues to possess an interest in Kioxia, the corporation has sold off several of its corporate operations, including its flash-memory division, now known as Kioxia.
In sum, Toshiba's acceptance of the tender offer from Japan Industrial Partners marks a significant milestone in the company's efforts to turn around its fortunes.
The deal would enable Toshiba to go private and delist from the Tokyo Stock Exchange. However, it remains to be seen whether the proposal will sit well with overseas activist investors and its approval is still subject to regulatory reviews in several countries.
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