Toshiba has announced that a $14 billion tender offer from private equity firm Japan Industrial Partners (JIP) has been successful. This deal allows Toshiba, the struggling industrial conglomerate, to go private.
The JIP-led consortium secured 78.65% of Toshiba shares through the tender offer, giving them a majority of more than two-thirds. This majority ownership allows them to force out the remaining shareholders.
This development means that Toshiba, a company with a 148-year history in electronics and power stations, will now be under domestic ownership after facing years of battles with overseas activist investors. Toshiba is expected to be delisted from the stock exchange as early as December.
Toshiba had accepted a buyout offer in March, valuing the company at 2 trillion yen ($13.5 billion). While some shareholders were not satisfied with the price, Toshiba argued that there were no better offers on the table.
Toshiba’s complex relationships with various stakeholders, including shareholders with differing opinions, have affected its business operations. A stable shareholder base is seen as essential for the company to pursue its long-term strategy focused on high-margin digital services.
Japan Industrial Partners (JIP) plans to retain Toshiba’s CEO, Taro Shimada. The prospect of aligning management and ownership is expected to boost morale, but analysts believe that Toshiba’s management needs to communicate a more compelling story to investors.
Although not well-known internationally, JIP has experience in corporate carve-outs and spin-offs from Japanese conglomerates, including Olympus’s camera business and Sony Group’s laptop computer business.
Toshiba has faced various challenges since 2015, including accounting scandals, heavy losses, and corporate governance issues. JIP’s consortium includes 20 Japanese companies, led by chipmaker Rohm, financial services firm Orix, and Chubu Electric Power. This deal is the largest M&A transaction in Japan this year. Japan has been the only major Asian market to experience growth in mergers and acquisitions so far this year, with private equity deals being particularly active
