Toshiba Receives Multiple Proposals, As It Mulls Strategic Options

Japanese conglomerate Toshiba has received multiple proposals as it considers its strategic options going forward.

It was back in April when Toshiba set up a special committee to solicit buyout proposals after shareholders voted down a management-backed restructuring plan.

Now Reuters has reported the firm has received eight proposals to go private. But at the same time Toshiba has also reportedly received two proposals for capital alliances that would see it remain as a listed entity.

Strategic options

Toshiba’s board of directors are currently locked in a power struggle with a number of large group of activist shareholders.

That said, Toshiba’s board has been growing more receptive to calls from foreign hedge fund investors to consider going private, hence the creation of the special buyout proposal committee in April.

Last month the board nominated Akihiro Watanabe, an executive from boutique US investment bank Houlihan Lokey, as chairman of its board and two representatives from activist shareholders as outside directors.

“We are encouraged by the multiple proposals as we feel they reflect big expectations about Toshiba’s potential,” chief executive Taro Shimada was quoted by Reuters as telling a briefing on Thursday.

Toshiba will evaluate the financing arrangements and the feasibility of the proposals and then after its annual shareholders’ meeting on 28 June, it will select potential investors to be given due diligence opportunities.

Foreign investors

The conglomerate did not name any of the potential investors or say how many were from overseas.

Reuters, citing sources familiar with the matter, reported that KKR & Co, Blackstone, Bain Capital, Brookfield Asset Management, MBK Partners, Apollo Global Management and CVC Capital Partners were considering bids.

Domestic funds Japan Investment Corp, Japan Industrial Partners and Polaris Capital Group were also looking at participating in bids, sources also told Reuters.

The participation of local Japan-based funds is vital as some of Toshiba’s key businesses – such as its defence equipment and nuclear power – are seen as strategically important to the Japanese government.

Japan’s economic security minister Takayuki Kobayashi has reportedly indicated the government will not block foreign investors from buying industrial giants, so long as they comply with regulations that govern the handling of sensitive technology.

Accounting scandal

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.

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.

That plan, which Toshiba had 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.

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