Tuesday, January 18, 2022

Scandal-hit Toshiba confirms US$20 billion takeover bid from British fund

The Japanese giant has been under pressure from large overseas shareholders for greater transparency and better governance.

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Japanese conglomerate Toshiba has received a buyout offer from a British private equity fund in a deal that could be worth around US$20 billion.

The scandal-hit giant’s shares were temporarily halted on Tokyo’s stock exchange after it confirmed the bid by CVC Capital Partners.

If successful, the buyout will allow Toshiba to focus on renewable energy and other core businesses, analysts suggested.

Toshiba’s US-listed shares skyrocketed almost 20% after the bid was revealed.

The erstwhile well-regarded computer manufacturer has been at the centre of a number of scandals in recent years, including false accounting and huge losses linked to its US nuclear unit.

Toshiba is one of Japan’s oldest and largest firms whose business empire stretches from home electronics to nuclear power stations.

Ten years ago, Toshiba was regarded by consumers as a reliable and innovative brand.

In 2011, Toshiba sold more than 17 million PCs but by 2017 this had fallen to under two million, reported Reuters at the time.

Last year, the Japanese electronics giant sold its final stake in the personal computer maker Dynabook, marking the end of its connection with manufacturing PCs and laptops after 35 years.

An accounting scandal in 2015, in which it admitted overstating its profits for six years, shocked corporate Japan.

The firm was on the brink of bankruptcy and to avoid being delisted from the Tokyo Stock Exchange, had to sell its profit-making memory-chip business to make up for huge losses.

Toshiba’s shares were still demoted to the Tokyo Stock Exchange’s second tier in 2017 and only returned to the first section in January this year.

The company’s recovery took place under Nobuaki Kurumatani – the first outsider to lead the company in 50 years. He joined from CVC Capital Partners in 2018 and has worked to regain investor confidence.

He confirmed the offer from CVC Capital Partners on Wednesday.

The deal with CVC would rank among the top 20 largest leveraged buyouts in history but due to Toshiba’s involvement in nuclear power stations, it would require the Japanese government’s permission.

Toshiba was once synonymous with the global ascent of corporate Japan, but has since been forced to diversify into other areas. It has been under pressure from large overseas shareholders for greater transparency and better governance.

CVC is looking to expand in Japan and has bought Shiseido’s lower-priced skincare and shampoo brands for US$1.5 billion.

It is also making big investments in rugby, and recently bought a 14.3% stake in the Six Nations annual men’s rugby tournament.

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