CVC Capital Partners has offered Toshiba $20bn to take the Japanese conglomerate private. Toshiba confirmed the offer saying that CVC had approached it with the acquisition plan and that it “will ask for further clarification and give it careful consideration”, but did not provide any further details.
The proposed deal comes three weeks after shareholders agreed to an independent probe from activists groups into the company following a series of scandals. Singapore-based Effissimo Capital Management, Toshiba’s largest shareholder, called for an investigation into the voting tactics at the 2020 annual shareholders’ meeting.
The secretive activist fund Effissimo, which is the group’s largest shareholder has led the pressure on Nobuaki Kurumatani, the chief executive who was hired in 2018 to turn the company around. In the three years since his appointment, Kurumatani has clashed repeatedly with shareholders.
Toshiba has been fined a record amount for faulty accounting. It lost billions of dollars in writedowns and a bungled foray into U.S. nuclear power. If bought over, some senior executives and chief executive Nobuaki Kurumatani will escape any regulatory scrutiny.
Interestingly Kurumatani joined Toshiba from CVC to bring about changes at the beleaguered company. He and Yoshiaki Fujimori, a senior advisor at the private equity firm, will discuss the proposal today, Reuters reported.
If the deal goes through, its will be the biggest private equity-led deal in Asia Pacific this year, surpassing Blackstone’s $6bn offer for Crown Resorts in Australia, according to Refinitiv data. It would also be CVC’s biggest foray into the region so far.
The Nikkei reported that CVC proposed to take over Toshiba with a tender offer worth more than $20 billion. “The shareholders may be receptive given that the deal appears to offer a premium,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. But “the government will also need to give its approval because of Toshiba’s involvement in defense. There are still a lot of questions around whether this kind of deal is achievable at all.”
CVC will reportedly form a consortium with corporate and financial partners to finance the buyout.
The takeover would invite regulatory review given Toshiba’s involvement in a number of sensitive industries.
Toshiba is a part of decommissioning the wrecked Fukushima Dai-Ichi nuclear power plant, a process that will take decades. It has developed technology to purify the radioactive water that is still seeping from the factory. It is also helping in the removal of all affected debris from the bottom of the reactors.
The Luxembourg-based buyout group declined to comment on the proposal. CVC has already bought over Shiseido Co.’s personal care unit in a $1.5 billion deal. CVC to date has concentrated on smaller-sized deals. The Luxembourg-based buyout group declined to comment on the proposal.
According to Bloomberg, private equity firms have turned their attention to Japan and have announced $15.1 billion deals over the past 12 months.
Toshiba was delisted from the Tokyo Stock Exchange but regained entry with the part sale of its chip business this year.
News of the CVC offer boosted shares in Toshiba by 18 percent on Wednesday. That brought the stock to its highest level since early December 2016, just before the company’s financial crisis began.