Toshiba’s private tender offer set to begin Tuesday.
Japan’s Toshiba to Launch $14 Billion Tender Offer to Go Private
By Makiko Yamazaki and Anton Bridge
TOKYO (Reuters) - Japan’s Toshiba announced on Monday that it will launch a $14 billion tender offer to take the industrial conglomerate private. This effort aims to buy out activist investors and return the company to domestic hands.
Toshiba’s board initially deemed private equity firm Japan Industrial Partners’ bid of 4,620 yen-per-share ($32.44) too low to recommend to shareholders. However, it later concluded that the price was “fair” given the unfavorable economic conditions and the absence of higher offers.
In order for the bid to succeed, at least two-thirds of shareholders must tender their shares. While the outcome remains uncertain, a successful bid would mark a turning point for Toshiba after years of upheaval.
“Today marks a turning point for Toshiba. The company is coming out of a tunnel after eight years,” said Akihiro Watanabe, chairperson of the board, during a news conference.
Toshiba’s shares have not surpassed 4,600 yen since the planned buyout was officially announced in late March, indicating investor uncertainty regarding the bid’s success.
The ongoing merger talks between memory chip maker Kioxia Holdings and Western Digital could introduce further uncertainties. Toshiba owns 40.6% of Kioxia, making it one of the company’s most important assets.
Toshiba stated that it is unable to make a comprehensive assessment of the Kioxia deal at this stage, as the terms are not sufficiently definitive. However, once any deal is announced, Toshiba will promptly assess it, review the fairness of Japan Industrial Partners’ terms, and provide its opinion.
Regarding potential changes in circumstances over Kioxia that may lower the prospects of shareholders tendering their shares, Watanabe stated that it is ultimately up to Japan Industrial Partners to decide how to proceed.
Mio Kato, founder of LightStream Research, believes that the bid will likely hit the two-thirds mark. He stated, “For activist investors, it’s a way to get capital out at reasonable if not spectacular returns. Not too many would be underwater.”
Some activist shareholders, although dissatisfied with the price, are tired of years of battles with the company and are eager to exit, according to sources familiar with the matter.
The tender offer, valuing Toshiba at 2 trillion yen, will run until September 20. It was originally scheduled to start in late July but was delayed due to regulatory reasons.
Alongside the tender offer, approximately 20 Japanese companies will participate. Major contributors include chipmaker Rohm with 300 billion yen and financial services firm Orix with 200 billion yen. These companies are long-time business partners who wish to maintain ties with Toshiba.
Toshiba has faced numerous crises since 2015, including accounting debacles, the bankruptcy of its U.S. nuclear power unit, and a major governance scandal. A shareholder-commissioned probe revealed that Toshiba colluded with Japan’s trade ministry to block overseas investors from gaining influence.
($1 = 142.2200 yen)
($1 = 142.4100 yen)
(Reporting by Makiko Yamazaki and Anton Bridge; Editing by Chang-Ran Kim, Edwina Gibbs and Sharon Singleton)
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