Toshiba board recommends a $14 bln buyout. On Thursday, Toshiba Corp (6502.T) announced that its board will propose shareholders accept a tender offer from Japan Industrial Partners, paving the way for a $14 billion takeover to take the Japanese conglomerate private.
After years of conflicts with offshore activist shareholders that led to management reshuffles and strategic reversals, the late July tender offer would put the electronics-to-power station’s producer in domestic hands.
In late March, the board accepted the purchase bid valuing the industrial group at 2 trillion yen ($14.31 billion). Still, it stated the 4,620 yen per share offer price was too low to propose shareholders tender their shares.
On Thursday, the board deemed the pricing “fair and reasonable,”, especially given the sluggish leveraged loan market and increasing interest rates.
Since March, Toshiba’s 40.6% share in Kioxia Holdings, which accounts for a substantial part of its worth, has dropped by 49.5 billion yen.
“A stable management base to implement a consistent business strategy to reform and grow the company over the medium to long term,” Toshiba stated of the takeover.
“It’s the best of a lot of bad options for pretty much all investors,” said LightStream Research founder Mio Kato. “Toshiba’s real value is significantly above the tender offer price, but getting to that point entails a lot of risk.”
He claimed activist shareholders have struggled to exit at a better price without crashing the share price.
Toshiba has suffered accounting problems, massive losses, and near-delisting since 2015. Corporate governance scandals have plagued it.
Sources say Japan Industrial Partners’ deal will involve 20 Japanese companies, including financial services firm Orix Corp (8591.T), chipmaker Rohm Co Ltd (6963.T), and Chubu Electric Power Co Inc (9502.T).
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