The board of Toshiba approved a $15bn offer from a consortium led by a Japanese private equity fund on Thursday, according to two people close to the talks, paving the way for the country’s biggest ever take-private deal.
The 147-year-old conglomerate, which was worth ¥1.8tn ($14bn) at Thursday’s market close, will be acquired by Japan Industrial Partners, a fund leading a consortium of 20 companies including financial services group Orix, Chubu Electric Power and chipmaker Rohm.
At its peak last year, when higher bids were expected from Bain Capital and other global private equity funds, the market valued the group at ¥2.5tn.
The approval heralds the end of an eight-year saga featuring an accounting scandal, a brush with delisting and a fire-sale of the company’s most valuable asset, the flash memory business now known as Kioxia. During the turmoil, Toshiba confronted one of the most embittered shareholder stand-offs in Japanese corporate history.
The deal, if it has the support of Toshiba’s highly vocal shareholders, will cause the company to be delisted — a fate it narrowly avoided in 2017 when the failure of its US nuclear business took it to the edge of bankruptcy.
As a consequence of its financial troubles, Toshiba opted in 2017 for an emergency issuance of $5.4bn worth of new equity in a deal engineered by Goldman Sachs. The deal dramatically altered Toshiba’s shareholder register, packing it with a number of aggressive foreign activist funds who have called on the company to find better ways to unlock value.
For the past six years, Toshiba’s largest shareholder has been Effissimo Capital Management, a secretive, Singapore-based fund run by Japanese managers that has applied heavy pressure on Toshiba throughout.
Toshiba began soliciting bids from last spring, initially attracting interest from the world’s largest buyout funds. But JIP was ultimately chosen as the preferred bidder in October and no other fund submitted a binding proposal to take over the company.
The Japanese fund has previously acquired assets from groups such as Sony and Olympus, but it has no record of buying an entire company of Toshiba’s size.
One investor said that the premium being offered by JIP appeared extremely low, but that there were probably investors on the register that would welcome the chance to exit. “If the shareholders go for it, it’s quite a low-key end to this story, after everything,” he said.
The conglomerate reported worse than expected results in February, with quarterly operating profit falling almost 90 per cent. Chief operating officer Goro Yanase resigned after auditors found he had repeatedly submitted entertainment expenses without reporting the names of attendees, in violation of company rules.
The outcome of the board meeting was first reported by Nikkei and is expected to be confirmed later on Thursday.
Toshiba declined to comment on the board approval. JIP was not immediately available for comment.