The board of Toshiba Corp has reportedly accepted a buyout offer from a consortium led by Japan Industrial Partners, a private equity firm. This could bring an end to years of turmoil for the scandal-hit industrial conglomerate.
The successful deal, estimated to be worth $15 billion, would enable the company to go private and be firmly controlled by domestic interests, thereby resolving long-standing tensions with activist shareholders. However, it is uncertain whether activist funds, which own about a quarter of the company, will accept the terms of the deal.
A number of Japanese firms, including Orix Corp, Rohm Co, and Chubu Electric Power, are expected to participate in the transaction, making it the third-largest M&A deal in the world this year.
Despite this, Toshiba’s shares have fallen by 12% over the past year, underperforming the Nikkei 225 average, as the company has been battered by accounting scandals, heavy losses, and corporate governance controversies since 2015.
This latest development could provide a way out for some activists, but it remains to be seen whether “Toshiba Fatigue” will outweigh disappointment over the price among investors.
Toshiba Corporation and Japan Industrial Partners united in 2023
Japan’s Toshiba Corporation has agreed to a buyout proposal from a consortium led by Japan Industrial Partners, a private equity firm.The deal, which is reportedly worth around $15 billion, could end years of turmoil for the scandal-plagued company. If successful, Toshiba will become a private entity under domestic control, resolving tensions with activist shareholders.
However, it remains unclear whether activist funds, which own about 25% of the company, will be satisfied with the terms of the deal. The proposed transaction would involve the participation of 20 Japanese companies, including financial services firm Orix Corp, chipmaker Rohm Co, and Chubu Electric Power.
The announcement of the deal is expected to be made public by Toshiba later on Thursday. Shares of Toshiba have been underperforming for the last year, with a 12% decline compared to a 2.2% fall in the Nikkei 225 average.
This deal could also have implications for Japan’s corporate governance landscape, as it would represent a major shift away from the tradition of cross-shareholdings and towards more active ownership by private equity firms. If successful, it could encourage more private equity investment in Japanese companies, potentially leading to more efficient and profitable operations.
The impact of Toshiba’s move to accept a buyout offer from a group led by private equity firm Japan Industrial Partners could be significant. The deal, which is estimated to be worth around $15 billion, would take the scandal-ridden industrial conglomerate private and put it under the control of domestic hands, potentially ending years of upheaval for the company.