The Tokyo-based company's board approved on Thursday a bid
of about CNY 2 trillion from a group led by domestic private equity firm Japan
Industrial Partners, the report said, without attribution.
The move could bring down the curtain on years of turbulence
at the storied Japanese firm after a series of scandals plunged it into
difficulty and set it on the path to a sale.
Toshiba's management, the Japanese government and the
company's unusually large proportion of vocal foreign shareholders have been at
odds over the company's future, with activist investors seeking to maximize
returns while the state prioritized keeping sensitive technologies and
businesses out of foreign hands.
A list of prominent activist investors saw an opportunity
and took stakes in Toshiba, shining a spotlight on the situation and helping
turn it into a test case for Japanese corporate governance. They included
billionaire Paul Singer's Elliott Management, Seth Fischer's Oasis Management
and Singapore-based funds Effissimo Capital Management and 3D Investment
Partners.
And some of the world's biggest private equity firms
considered making buyout offers, including Bain Capital, CVC Capital Partners
and KKR.
Toshiba's nuclear power business is deemed important to
national security. It's involved in decommissioning the Fukushima Dai-Ichi
atomic power plant, which was wrecked in the earthquake, tsunamis and nuclear
meltdowns of 2011. That made it hard for the government to accept a transfer of
ownership to an overseas firm.
If the sale goes through, it will be one of the largest
Asian transactions this year at a time when deal volumes have plunged. It will
also be one of the biggest ever private equity-led buyouts in Japan.
The path to the board's acceptance was far from smooth. The
process faced multiple delays, with Bloomberg News reporting that the JIP-led
group faced headwinds securing financing as banks became more cautious about
providing funds for large deals in a less favourable economic environment.
Toshiba has lurched from one disaster to another over the
past eight years, starting with an accounting scandal in 2015 that devastated
profits and led to a company-wide restructuring. The subsequent unraveling of a
costly foray into nuclear power business in the US led to a $6.3 billion writedown
and saw it teeter on the edge of delisting. It was forced to sell its crown
jewel memory-chip unit and offer stock that was snapped up by foreign investors.
Since then, stock owners and executives have clashed over
the company's future. When Effissimo sought in 2020 to put one of its
co-founders and other candidates on Toshiba's board, shareholders rejected it.
Suspicious about how the vote was conducted, Effissimo
proposed that independent investigators be appointed to look into it, winning a
landmark shareholder vote in 2021. The report from the probe alleged that
Toshiba management worked hand in hand with government allies to sway the
outcome.
Early last year, stock holders rejected a proposal by
management to split the company in two, which had been put forward as an
alternative to selling the conglomerate to private equity, which investors had
called for. The failure of that plan set in motion a search for strategic
options for Toshiba's future, including a possible sale. JIP was chosen as the
preferred bidder in October.
Tokyo-based JIP was founded in 2002 by Hidemi Moue, who is
still the buyout fund's chief executive officer. He began his career at
Industrial Bank of Japan, which was one of the companies that merged to form
Mizuho Financial Group in 2000. JIP has been involved in carving out businesses
considered peripheral by their parents, and is known for buying PC maker Vaio
from Sony Group in 2014. © Bloomberg
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