Toshiba Corp.’s chief executive officer said nothing is decided on going private and staying public remains a possibility, after the Japanese industrial giant received eight buyout offers as part of a process to decide its future.
"If there’s greater value in not taking the company private, that’s still an option,” Taro Shimada said in an interview in Tokyo. "What’s important is that value is maximized for all of the company’s stakeholders.”
It’s a reminder that the next step is far from certain for the iconic Japanese firm, where shareholders and management have been at loggerheads for years over strategy and corporate governance. It comes after an outside director spoke out against about Toshiba’s plan to put representatives of activist investors on its board, an unusually public display of dissent that highlights the tensions that exist within the conglomerate.
Toshiba said last week it got eight buyout offers and two proposals for capital and business alliances as part of its process to solicit strategic options. While it didn’t disclose the bidders, Bain Capital, Blackstone Inc. and CVC Capital Partners are among the private equity firms that were weighing bids, Bloomberg has reported.
Toshiba’s leaders had long fought against the idea of idea of private ownership, with former CEO Satoshi Tsunakawa laying out five reasons why it would be the wrong decision just this February. His management team instead argued the company should be split in two, but investors voted down that approach.
Toshiba will closely review the buyout offers and alliance proposals and narrow the list down to a "realistic” number, Shimada said.
The company has to consider a wide pool of stakeholders including customers, shareholders, employees and the government, Jerry Black, an outside director who chairs Toshiba’s special committee for the review process, said in an interview.
Analysts have warned that getting government approval for any buyout wouldn’t be easy. Toshiba’s nuclear power business, which is deemed important to Japan’s national security, could be a major obstacle.
Black said Toshiba would look at the ability to win government approval as one of the criteria for selecting bids.
We’ve asked each of the bidders "for their ideas and solutions,” he said. "It will be the sponsors’ responsibility to get approval,” he said. "And from that perspective, we want to understand the probability.”
Toshiba has lurched from one disaster to another over the past seven 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 the nuclear power business in the U.S. led to a $6.3 billion writedown and saw the firm 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 activist investors, giving them an outsize presence on the shareholder register.
Since then, stock owners and management have clashed over the company’s future.
"We’ve lost a significant amount of shareholder trust,” Black said. "We have to execute,” he said. "And we have to communicate better.”
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