Toshiba has received a buyout offer from a British private equity fund and will consider the proposal, it said Wednesday, with reports suggesting the deal could be worth about $20 billion.
Private equity firm CVC Capital Partners is proposing taking Toshiba Corp private in a deal worth about $20 billion, a person familiar with the matter said, as the Japanese tech giant faces pressure from activist shareholders to improve its governance.
If realised, the deal will shield management of the
scandal-hit conglomerate, particularly Chief Executive Nobuaki Kurumatani, from
scrutiny amid calls from large overseas shareholders for greater transparency
from its board.
"Toshiba received an initial proposal yesterday, and
will ask for further clarification and give it careful consideration,"
Toshiba said in a statement, without providing further details.
Kurumatani told a group of reporters earlier that Toshiba's
board would discuss the proposal on Wednesday, according to the Nikkei business
daily.
Shares in Toshiba were untraded in early trade with buy
orders overwhelming sell orders.
Kurumatani, a former banker at main Toshiba lender Sumitomo
Mitsui Financial Group, headed the Japanese arm of CVC before joining Toshiba.
One of Toshiba's board members is a senior adviser at CVC Japan.
CVC is considering a 30 per cent premium over Toshiba's
current share price in a tender offer, said the source, who declined to be
identified as the matter is private. That would put the value of the deal at
nearly 2.3 trillion yen ($21 billion) based on Tuesday's closing share price of
3,830 yen.
The private equity firm declined to comment.
CVC is looking to expand in Japan, taking advantage of large
Japanese companies under pressure to sell non-core assets and improve returns
to shareholders. It is buying Shiseido Co's lower-priced skincare and shampoo
brands for $1.5 billion.
An acquisition of Toshiba, one of Japan's few manufacturers
of nuclear power reactors, needs government approval.
The battle between activist investors and Toshiba management
is seen as a test case for whether the established giants of corporate Japan
can respond to calls for better governance.
The Japanese firm has been under pressure from activist
funds since it sold 600 billion yen of stock to dozens of foreign hedge funds
during a crisis stemming from the bankruptcy of its U.S. nuclear power unit in
2017.
"I think that it's important to separate Toshiba the
company from the incentives for management," said LightStream Research
analyst Mio Kato, who publishes on investment research platform Smartkarma.
"The incentives for management would be to have a
friendly shareholder who would keep them in place. There is the government to
consider as well for Toshiba as they seem to have been heavily involved behind
the scenes. If this deal has tacit approval from the government there could be
a fight with activists."
0 comments:
Post a Comment