Toshiba Corp. (6502.T) announced Thursday that its board had accepted a 2 trillion yen ($15.2 billion) acquisition bid from a consortium led by private equity firm Japan Industrial Partners.
After much conflict with overseas activist shareholders, the scandal-ridden industrial conglomerate would be privatized and firmly in domestic hands.
The terms may not satisfy activist funds, believed to hold 25% of the corporation.
Sources said 20 Japanese businesses, including financial services firm Orix Corp (8591.T), chipmaker Rohm Co (6963.T), and Chubu Electric Power (9502.T), will participate in the agreement. Refinitiv data shows it would be the third-largest M&A deal worldwide this year.
“This resolves months of uncertainty surrounding whether a sale was coming and years of doubt regarding Board comprehension of the correct price,” said Smartkarma analyst Travis Lundy of Quiddity Advisers.
“Even if it’s not ideal, this would give many activists an escape. ‘Toshiba Fatigue’ may be enough to overcome pricing disappointment.”
Toshiba, a huge corporation owning 40.6% of memory chip producer Kioxia Holdings, has been plagued by accounting irregularities and massive losses since 2015 and nearly delisted before embroiling in corporate governance concerns.
At its lowest point, a shareholder-commissioned study found Toshiba had cooperated with Japan’s commerce ministry, which views Toshiba’s nuclear and defense technologies as a key asset, to hinder outside investors from obtaining power at its 2020 shareholder meeting.
The strategic review and buyout proposal followed that catastrophe.
Toshiba began an auction a year ago and received eight takeover proposals, and two capital alliance offers.
Sources claimed four bids advanced to the second round, including private equity companies Bain Capital, CVC Capital Partners, and Brookfield Asset Management (BAM.TO).
JIP and state-backed Japan Investment Corp (JIC) split over management retention and restructuring plans.
The JIP group made a binding takeover bid last month with $10.6 billion in loan pledges from major banks.
Sources say several board members were displeased with JIP’s bid price, which delayed a vote on its proposal for weeks.
Toshiba shares fell 12% last year, compared to the Nikkei 225’s 2.2% drop (.N225).
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