Toshiba Corp is considering a buyout offer from a British private equity fund, it said yesterday, with reports suggesting the deal could be worth about US$20 billion.
Trading of Toshiba shares was halted on the Tokyo Stock Exchange at the open, after the Japanese company confirmed the offer in a statement.
Toshiba said that it “received an initial proposal yesterday” by CVC Capital Partners for a buyout.
“We will request detailed information and carefully discuss” the offer, the firm added.
The Nikkei Shimbun said that CVC was considering a 30 percent premium over the Japanese industrial group’s current share price, valuing the deal at nearly ￥2.3 trillion (US$20.9 billion) based on Tuesday’s close.
It said that CVC would consider recruiting other investors to participate in the buyout.
CVC declined to comment on the matter.
The proposal would take Toshiba private, with delisting intended to produce faster decisionmaking by Toshiba’s management, which has clashed with shareholders recently, reports said.
The move, if successful, would allow the firm to concentrate resources on renewable energies and other core businesses, they said.
The two firms are not strangers — Toshiba CEO and president Nobuaki Kurumatani was head of CVC’s Japanese operations from 2017 to 2018, before he took the top job at the conglomerate.
Moreover, a senior executive at CVC Japan is currently an outside director on Toshiba’s board.
Kurumatani told reporters that “we received the proposal, but we’ll discuss it in a board meeting.”
Reports suggested the discussions were to begin yesterday, though Toshiba did not immediately specify.
Toshiba has been hit by false accounting scandals and huge losses linked to its US nuclear unit.
It was forced to sell its profit-making chip business to make up for huge losses.
Following painful restructuring, its earnings rebounded and the company in January returned to the prestigious first section of the Tokyo Stock Exchange.
Justin Tang (鄧文雄), head of Asian research at United First Partners, said that CVC’s representation on Toshiba’s board meant the fund was already “familiar with Toshiba’s assets as well as its inner workings.”
“Given the turbulence in Toshiba, the favorable interest-rate environment and supportive investors, the situation is right up CVC’s alley with their expertise in restructuring and turnarounds,” he said.
“They will, however, have their work cut out for them in regards to regulatory approvals,” Tang said.
Japanese Chief Cabinet Secretary Katsunobu Kato stressed the importance of due diligence given Toshiba’s large presence in Japan.
“Regarding companies that are important to our country’s society and economy, we think it’s crucial they can build and maintain a management system that allows them to continue stable operations,” he said.
The news sent Toshiba shares soaring yesterday and they finished up 18.3 percent at ￥4,530.
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