Toshiba reveals buyout offer

Leading the tender offer is Japan Industrial Partners, a buyout fund comprised of prominent Japanese banks and corporations

3 mins read

Toshiba has unveiled a significant move toward privatization with a 2 trillion yen ($14 billion) tender offer, signaling its intent to revive itself amid past scandals and challenges in the Japanese electronics and energy sector.

Leading the tender offer is Japan Industrial Partners, a buyout fund comprised of prominent Japanese banks and corporations. The offer, priced at 4,620 yen ($32) per share, is set to commence on Tuesday.

Chairperson Akihiro Watanabe has urged shareholders to support this proposal, emphasizing that it represents the sole pathway for Toshiba Corp. to regain its former strength. He expressed confidence in Toshiba’s resurgence, stating, “This decision holds significance not only for Japan but for the global stage. I have strong faith in Toshiba’s revival.”

Toshiba, headquartered in Tokyo, has also reported a loss of 25 billion yen ($176 million) for the April-June quarter, despite generating sales of 704 billion yen ($5 billion), a decrease of nearly 5% compared to the previous year. The company refrained from providing a full fiscal year profit projection due to uncertainties surrounding its computer chip business.

The success of this proposal would mark a pivotal milestone in Toshiba’s ongoing efforts to transform its fortunes and potentially lead to its delisting from the Tokyo Stock Exchange. To achieve success, a minimum of two-thirds of shareholders must participate in the bid. However, some overseas activist investors, who own a significant portion of Toshiba’s shares, have expressed reservations about the offer.

Having initially received approval from the Toshiba board in March, the proposed buyout aims to maintain Toshiba’s ties with Japanese partners. Japan Industrial Partners, established in 2002 to restructure Japanese companies, has previously invested in other prominent Japanese brands like Sony, Hitachi, and Olympus.

Toshiba, a key player in Japan’s nuclear industry, faced significant setbacks after the 2011 tsunami led to meltdowns at the Fukushima Dai-ichi nuclear reactors. The company continues to be involved in the extensive decommissioning process at the site, which is expected to span decades. Additionally, Toshiba’s U.S. nuclear subsidiary, Westinghouse, declared bankruptcy in 2017 after grappling with substantial losses due to soaring safety expenses.

Once renowned for its household appliances, laptops, batteries, and computer chips, Toshiba’s reputation was tarnished by a far-reaching accounting scandal in 2015 involving longstanding financial manipulation.

Underscoring the latest offer as both “fair and reasonable,” Toshiba has emphasized its strategic soundness. Deep-rooted business relationships with long-term partners who are willing to invest underscore the management rationale behind the proposal.

Taro Shimada, Chief Executive of Toshiba, highlighted the importance of the offer for the company’s stability, particularly as it approaches its 150th anniversary. He made a plea to stakeholders for their support, saying, “Our company’s value lies in creating what was previously nonexistent in the world.”

As Toshiba navigates this pivotal juncture, its actions are poised to significantly impact its trajectory in the years ahead.