Toshiba Says It Will Seek Buyout Offers

Strategic options. Japanese conglomerate shares rise after Toshiba says it will solicit deal offers, including buyout offers

Shares in Toshiba have risen after the Japanese conglomerate offered its hedge fund investors hope of a potential lucrative exit.

According to Reuters the Japanese giant said it would solicit deal offers, including on a potential buyout, pushing its share price up near 5 percent in Tokyo trading on Friday.

Toshiba was hit by a major accounting scandal in 2015 and faced 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.

Strategic options

And such was the crisis that enveloped the conglomerate, it attempted many options to secure its future.

In recent years Toshiba 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 it began talking with a number of private equity firms as it explored its future options.

Then in November last year Toshiba revealed plans to break itself up into three separate companies.

The plan, which Toshiba hoped to complete by March 2024, would result in the creation of one unit focused on infrastructure and another unit focused on electronic devices such as power semiconductors.

The third unit, which would retain the Toshiba name, would manage Toshiba’s stake in memory chip maker Kioxa Holdings and other assets.

At the time industry watchers were divided over the benefits of a breakup, with Fumio Matsumoto, chief strategist at Okasan Securities, saying last November it would create “three lacklustre midsize companies”.

However Rakuten Securities strategist Masayuki Kubota said the move would allow the 146-year-old conglomerate to rebuild its governance.

But Toshiba’s top shareholder (Effissimo Capital Management), as well as an influential proxy advisory firm (Institutional Shareholder Services), last month signalled their opposition to the breakup of the veteran Japanese conglomerate.

Buyout, privatisation

Now Reuters reported on Friday that Toshiba will solicit deal offers, including a potential buyout.

Toshiba said it had hired Nomura Securities as a financial adviser on strategic alternatives, including a potential privatisation.

The timing of the announcement – just before an annual general meeting expected in June – likely speaks to the continued pressure that the company has faced from investors, said Reuters.

Toshiba shareholders have reportedly, publicly and privately, called for a consideration of a buyout.

Toshiba’s top shareholder, Effissimo Capital Management, said last month it had agreed to sell its stake to Bain Capital if the S private equity firm launched a tender offer.

Bain has said nothing had been decided about a takeover bid, but a media outlet reported the firm was planning to team up with Japanese investment funds to make an offer.

Last month, Toshiba shareholders last month voted down a company proposal to spin off its devices unit.