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Saturday, June 3, 2023

Toshiba: Toshiba accepts $15bn takeover offer from JIP, Nikkei says

TOKYO: Toshiba Corp accepted a purchase offer worth $15.3 billion from a japanese consortiumreported the Nikkei newspaper, as the iconic conglomerate moved one step closer to ending a troubled chapter in its more than 140-year history.
The Tokyo-based company’s board on Thursday approved an offer of about 2 trillion yen ($15.3 billion) from a group led by domestic private equity firm Japan Industrial Partners Inc., according to the report, no attribution.
The move could end years of turbulence at the storied Japanese firm after a series of scandals plunged it into trouble and headed for a sale. Toshiba’s management, the Japanese government and the company’s unusually large proportion of foreign shareholders have been at odds over the company’s future, with activist investors seeking to maximize profits while the state prioritizes keeping sensitive technologies and businesses out. out of reach of foreigners.
A list of prominent activist investors saw an opportunity and took stakes in Toshiba, highlighting the situation and helping make it a test case for Japanese corporate governance. They included billionaire Paul Singer’s Elliott Management Corp, Seth Fischer’s Oasis Management Co, and Singapore-based funds Effissimo Capital Management Pte and 3D Investment Partners Pte.
And some of the world’s largest private equity firms considered making takeover offers, including Bain Capital, CVC Capital Partners and KKR & Co.
Toshiba’s nuclear power business It is considered important to national security. It is involved in the decommissioning of the Fukushima Dai-Ichi atomic power plant, which was destroyed in the 2011 earthquake, tsunamis and nuclear meltdowns. That made it difficult for the government to agree to a transfer of ownership to a foreign company.
If the sale goes through, it will be one of the biggest Asian transactions this year at a time when business volumes have plummeted. It will also be one of the largest private equity-led acquisitions in Japan.
The road to board acceptance was far from easy. The process faced multiple delays, with Bloomberg News reporting that the JIP-led group faced difficulties obtaining financing as banks became more cautious about funding large deals in a less favorable economic environment.
Toshiba has gone from one disaster to another over the past eight years, beginning with an accounting scandal in 2015 that devastated earnings and led to a company-wide shakeup. The subsequent unraveling of an expensive foray into the US nuclear power business led to a $6.3 billion writedown and saw it teeter on the brink of delisting. He was forced to sell his crown jewel memory chip unit and offer shares that were bought by foreign investors.
Since then, stock owners and executives have clashed over the future of the company. When Effissimo sought in 2020 to put one of its co-founders and other candidates on Toshiba’s board, shareholders rejected it. Suspicious about how the vote was conducted, Effissimo proposed that independent investigators be appointed to investigate it, winning a historic shareholder vote in 2021. The investigation report alleged that Toshiba management worked hand-in-hand with allies of the government to influence the outcome.
Earlier last year, shareholders rejected a management proposal to split the company in two, which had been pitched as an alternative to the sale of the conglomerate to private equity, which investors had called for. The failure of that plan set in motion a search for strategic options for Toshiba’s future, including a possible sale. JIP was chosen as the preferred bidder in October.
Tokyo-based JIP was founded in 2002 by Hidemi Moue, who remains the CEO of the buyout fund. He began his career at Industrial Bank of Japan Ltd., which was one of the companies that merged to form Mizuho Financial Group Inc. in 2000. JIP has been involved in building businesses considered peripheral by his parents, and is known for buying PC manufacturer Vaio Corp of Sony Group Corp in 2014.

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