Japan Industrial Partners planning to buy Toshiba Corp at a valuation of $16 billion

Bloomberg News on Tuesday reported that a business consortium led by Japan Industrial Partners is planning to acquire Toshiba Corp at a valuation of 16.1 billion dollars.

Toshiba Corporation which is internationally known as Toshiba is renowned for its electronic products including personal computers, batteries, printers, and hard disk drivers to name a few. Founded in 1875, it is one of the largest conglomerates in the world with more than 116000 employees working under its payroll.

The consortium led by Japan Industrial Partners Inc is planning to acquire a majority stake in Toshiba by offering 1 trillion Yen in cash. There are also plans to provide the industrial conglomerate with a credit of 200 billion yen as working capital. Reports suggest that the consortium is seeking a total financing of 1.4 trillion yen from banks to complete the acquisition of Toshiba Corp. If successful, this acquisition deal would be one of the biggest buyouts in the Asian continent in the current financial year.

People who have access to information regarding the acquisition deal told news agencies that the considerations are only at their initial stages and the parties to the deal are currently in preliminary talks regarding the valuation and financing of the acquisition. They also said that there is no surety the talks will end up in a fruitful transaction signalling that there exist some issues in the acquisition offer.

News agencies reported that Toshiba informed all its banking partners regarding the buyout attempt of a consortium led by JIP. In the meeting which happened on October 20th, Toshiba requested banks to provide enough financing support to complete buyout deals. Representatives of Sumitomo Mitsui Banking Corp., one of the largest banks in Japan, were also part of the meeting convened by the industrial conglomerate.

JIP has yet to finalize the equity commitments from its partners, while banks remain cautious about making binding commitments, the people said. Both the consortium led by JIP and a rival group led by state-backed investment fund Japan Investment Corp. will find it hard to meet a November 7 deadline to line up commitment letters, Bloomberg News reported earlier.

There are also reports regarding some companies trying to change from a JIP-led consortium to a rival group. The confusion regarding the membership pattern of the consortium and how much equity each partner is willing to invest is the major reason why banks are not committing to any financing requests.