End of an era for Japanese electronics giant Toshiba, as it undergoes transition into private ownership after years of upheaval
The long-running ownership and financial saga surrounding Toshiba has witnessed a notable development in late 2023, as it continues its transition into private ownership.
Reuters reported that Toshiba, once one of Japan’s most famous industrial brands, has on Wednesday been delisted after 74 years on the Tokyo stock exchange.
Since 2015 Toshiba has been engulfed in upheaval when a financial scandal involving accounting malpractices was revealed. The scandal showed that Toshiba had overstated its profit by $1.59bn (£1.25bn) over a seven year period (since 2008).
In 2020, Toshiba further accounting irregularities were discovered.
Now Reuters has reported that Toshiba shares ended their 74 year run on Tuesday, which was their last trading day on the Tokyo stock exchange. Toshiba shares reportedly closed at 4,590 yen, down 0.1 percent from the previous day.
“Toshiba Corporation … hereby announces that, following approval by the Company’s shareholders of a proposal regarding share consolidation as proposed at the Company’s extraordinary shareholders meeting held on November 22, 2023, the common shares of the Company will be delisted from the Prime Market of the Tokyo Stock Exchange, Inc. and the Premier Market of the Nagoya Stock Exchange, Inc on December 20, 2023, through the prescribed procedures,” the Japanese conglomerate announced.
“The Company expresses its sincere gratitude to its shareholders and other stakeholders for their understanding and wholehearted support to the Company’s management for many years since the Company was listed,” it added.
“Toshiba Group will now take a major step toward a new future with a new shareholder. Even after privatisation … the Company will strive to further enhance its corporate value and contribute to society,” it added. “The Company would appreciate it if the stakeholders of the Company could provide the Company with their continuous understanding and support.”
Toshiba is currently being taken private by a group of investors led by private equity firm Japan Industrial Partners(JIP). Other investors include financial services firm Orix, Japanese utility Chubu Electric Power and chipmaker Rohm.
Toshiba has already teamed up with Rohm to invest $2.7 billion in manufacturing facilities to jointly produce power chips.
The $14 billion takeover keeps Toshiba in Japanese hands after protracted battles with overseas activist investors.
The Japanese government is said to be keeping a close watch on developments, as Toshiba employees around 106,000 people and some of its operations are seen as critical to Japanese national security.
Toshiba has been seeking a way forward after years of accounting and mismanagement scandals that began eight years ago.
Back in 2015, Toshiba had been hit by a major accounting scandal and faced a possible delisting – a crisis that resulted in foreign-based shareholders owning more than half of the company, including activist shareholders such as Elliott Management, Third Point and Farallon.
It resulted in the resignation of Toshiba’s then chief executive, and the scandal was Japan’s biggest since Olympus was found in 2011 to have covered up $1.7 billion (£1bn) in losses. It came at a time when the Japanese government had been introducing measures to improve corporate governance in the country.
Toshiba attempted many options to secure its future. For example it sold off assets such as medical devices, personal computers, consumer electronics and its US nuclear power unit, Westinghouse Electric, which declared bankruptcy in 2017.
In August 2021 Toshiba began talking with a number of private equity firms as it explored its future options.
Then in November 2021 Toshiba revealed plans to break itself up into three separate companies.
The plan, which Toshiba had hoped would be completed by March 2024, would have resulted in the creation of one unit focused on infrastructure, and another unit focused on electronic devices such as power semiconductors.
But Toshiba’s top shareholder (Effissimo Capital Management), as well as an influential proxy advisory firm (Institutional Shareholder Services), in March 2022 signalled their opposition to the breakup of the veteran Japanese conglomerate.
That investor refusal to approve either the breakup or reorganisation proposals presented by Toshiba’s management, left the company without a clear way forward.
In April 2022 Toshiba said it would solicit deal offers, including a potential buyout.
In early June 2022 Toshiba said it had received eight buyout offers and two offers of capital alliances that would see it remain as a listed entity.
Later in June 2022, Toshiba shareholders approved the addition of two board members from large activist investors, which added momentum to potential buyout plans.
Toshiba also previously said it would consider the possibility of privatisation, although the company’s chief executive insisted the firm would study all options.
In November 2022 a consortium led by private equity firm Japan Industrial Partners (JIP) submitted a 2.2 trillion yen ($14 billion) offer for the Japanese conglomerate, subject to approval by Toshiba.
Then in September 2023, Toshiba announced that a $14 billion tender offer from Japan Industrial Partners (JIP) has been successful – paving the way for the embattled industrial conglomerate to go private.
However at this stage it is not clear what shape Toshiba will ultimately take under its new owners. It is reported that four JIP executives will join the board, as well as one each from investors Orix and Chubu Electric.