The board of directors for Tokyo-based Toshiba Corporation announced Thursday that it has agreed to a buyout offer from the private equity firm Japan Industrial Partners (JIP) of roughly 2 trillion yen, or U.S.$15.3 billion, a move that would privatize the global manufacturing giant.
The offer represents a 9.7% premium over the company’s closing stock price Thursday on the Tokyo Stock Exchange. Toshiba’s U.S.-listed shares climbed 9.2% on the news.
JIP consists of 23 business interests, including Rohm Co., Chubu Electric Power and Orix Corp., along with six Japanese banks. Reuters, citing Refinitiv data, noted that it would represent the third-largest M&A deal in the world for 2023.
Last July, Toshiba Corp. identified four bid groups: JIP, Bain Capital, CVC Capital Partners and Brookfield Asset Management, the Japanese Times reported.
The deal does not directly impact Toshiba America Business Solutions (TABS), which is a separate and distinct subsidiary of Toshiba Corp. TABS’ parent company, Toshiba Tec Corporation (TTEC), is a stand-alone company independently traded.
“This offer achieves a strong overall valuation at around 2 trillion yen. We believe this is good news and progress towards Toshiba Corp. reaching stable and sustainable broader financial backing,” noted Larry White, president and CEO of TABS. “While we believe today’s announcement is a very positive one for Toshiba Corp., it has no foreseeable impact on TTEC or TABS.”
The tender offer is expected to commence in late July. It could be met with resistance from foreign activist investors.
“Having a resolution here would be a positive, as one of the issues for Toshiba has been a lack of a consistent strategy due to the constant changes of direction,” Mio Kato, an analyst at LightStream Research, told Bloomberg. But “it still leaves some work to do in terms of establishing new growth drivers and maximizing the potential of some of the emerging businesses.”
Toshiba Corp. has been in the news frequently during the past eight years, mostly in relation to corporate direction, shareholder strife and corporate governance transgressions. An accounting scandal in 2015 ruffled the corporation’s reputation and prompted a company-wide restructuring. Also a huge misstep in its incursion into the U.S. nuclear power business led to a $6.3 billion writedown and prompted the sale of its memory-chip unit.
According to Reuters, a shareholder-commissioned investigation into the company found that Toshiba Corp. had colluded with the Japanese trade ministry in an effort to stymie overseas investors from gaining influence during its 2020 shareholder meeting. This was the genesis of a strategic review that paved the way to the buyout proposal.
Toshiba Corp. shareholders rejected a proposed split of the company in early 2022.
