Toshiba is Set to Delist in Japan After 74 Years as Part of $14 Billion Deal
Toshiba Corporation has officially announced the successful conclusion of a $14 billion tender offer presented by private equity firm Japan Industrial Partners (JIP). This significant development marks the way forward for the beleaguered industrial conglomerate to transition into a private entity.
The consortium led by JIP managed to secure a substantial 78.65% of Toshiba’s shares through the tender offer, thereby gaining a majority stake exceeding two-thirds. This majority position empowers the group to execute the necessary steps to eliminate any remaining shareholders.
This transaction signifies a transformative moment for Toshiba, a company with a storied 148-year history encompassing diverse business sectors, ranging from electronics to power stations. It follows years of contentious encounters with foreign activist investors. Consequently, Toshiba is expected to undergo delisting as early as December.
Analyst Travis Lundy of Quiddity Advisors, an author on Smartkarma, remarked, “Activist shareholders and Toshiba were stuck with each other for years. This takeover allows both sides to escape their mutual bearhug.”
Toshiba had previously accepted the buyout proposal, which valued the industrial conglomerate at 2 trillion yen (approximately $13.5 billion) back in March. While some shareholders expressed dissatisfaction with the offered price, Toshiba maintained that there were no prospects for a higher bid or competing offer.
In response to the successful conclusion of the tender offer, Toshiba’s Chief Executive, Taro Shimada, expressed gratitude, stating, “We are deeply grateful to many of our shareholders for being understanding of the company’s position.” He further added that Toshiba “will now take a major step toward a new future with a new shareholder.”
Toshiba has consistently faced challenges due to complex relationships with various stakeholders, including shareholders with differing viewpoints. These challenges have hindered business operations. The company believes that a stable shareholder base will enable it to pursue its long-term strategic objectives, with a focus on high-margin digital services.
Japan Industrial Partners intends to retain Toshiba’s CEO, Taro Shimada. The expectation is that improved alignment between management and new ownership will have a positive impact on employee morale. However, to achieve success, management will need to craft a more compelling narrative for investors in the wake of this transition, according to analyst Travis Lundy.
While Japan Industrial Partners may not be a well-known entity internationally, the firm has previously been involved in corporate carve-outs and spin-offs from Japanese conglomerates. Examples include Olympus’s camera business and Sony Group’s laptop computer business.
The consortium behind this acquisition features 20 Japanese companies, with leading participants including chipmaker Rohm, financial services firm Orix, and Chubu Electric Power. This transaction ranks as the largest M&A deal in Japan this year, and it underscores Japan’s ongoing growth in mergers and acquisitions, particularly in the realm of private equity, as illustrated by the planned $6.4 billion buyout of materials maker JSR by a government-backed fund.
Data from LSEG indicates that Japan stands as the only major market in Asia to experience growth in mergers and acquisitions year-to-date.
