Toshiba is set to go private after a consortium led by Japan Industrial Partners (JIP) succeeded in taking control of the struggling conglomerate through a ¥2 trillion ($13.5 billion) tender offer, Toshiba said Thursday.
The move is a milestone in the 148-year history of Toshiba, which has been beset by a series of troubles for nearly a decade that have derailed management's focus on reconstructing the business.
Toshiba said the JIP-led group has gained 78.65% of Toshiba’s outstanding shares through the bid, which began Aug. 8, paying ¥4,620 per share. The group needed to acquire more than two-thirds of the shares for the offer to be successful.
Chubu Electric Power announced Thursday that it would join the group by investing ¥100 billion.
The JIP-led group will attempt to obtain the rest of the shares after an extraordinary shareholders meeting expected to be held around November. Toshiba is then expected to be delisted from the stock market by the end of this year, ending its more than 70 years as a public firm.
Although Toshiba had appeared unhappy with the offer price of ¥4,620 at first, the firm’s board eventually decided in June to encourage its shareholders to participate in the offer.
“We are deeply grateful to many of our shareholders for being understanding of the company’s position in this matter,” Toshiba CEO Taro Shimada said in a statement.
“The company will implement a series of procedures for the privatization of the company’s shares going forward. Toshiba Group will now take a major step toward a new future with a new shareholder.”
Becoming a private firm will relieve the firm of the need to expend energy dealing with foreign activist investors, which will likely enable it to focus more on its business turnaround efforts.
But whether Toshiba will really be able to get itself out of the woods and reclaim its status as a leading Japanese firm, as well as its competitiveness, remains to be seen.
Compared with a peak of over ¥7.6 trillion recorded in the fiscal year beginning April 2007, Toshiba’s sales had shrunk to less than half of that figure, to ¥3.4 trillion, by fiscal 2022.
Toshiba’s descent began in 2015 after accounting misconduct came to light. The firm had doctored the books, padding its profits over seven years to the tune of hundreds of billions of yen. The scandal forced the then-president and several other directors to resign, and raised serious doubts over Toshiba’s corporate governance.
After the accounting malpractice, the firm also suffered a massive loss due its failed gamble on U.S. nuclear unit Westinghouse. The debacle led Toshiba to raise ¥600 billion in foreign capital, including from activist investors.
Toshiba’s reputation was further damaged in 2021 after it was found to have colluded with the government to influence foreign activist investors’ voting behavior at an annual shareholders meeting.
As those troubles heavily impacted Toshiba’s business, the firm had to sell off and withdraw from a number of sectors, such as memory chips, overseas nuclear construction and medical equipment, to keep itself afloat.
In a statement released last month, the JIP-led group said that “we aim to establish a stable management structure for Toshiba and to implement a new growth strategy quickly” once the deal is complete.
“Specifically, we intend to further develop each business by better responding to the needs of Toshiba's customers, implementing growth strategies by developing new technologies, and making workplaces more rewarding for executives and employees of Toshiba.”
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