Toshiba has announced that the $14 billion tender offer from Japan Industrial Partners (JIP) has been successful, allowing the embattled industrial conglomerate to go private. The JIP-led consortium received 78.65% of Toshiba shares tendered, giving them a majority of more than two-thirds, which is enough to squeeze out remaining shareholders. This deal puts Toshiba, a 148-year-old electronics-to-power stations maker, in domestic hands after years of battles with overseas activist investors. The company is expected to be delisted as early as December.
According to analyst Travis Lundy of Quiddity Advisors, this takeover allows both activist shareholders and Toshiba to escape their mutual bearhug. In March, Toshiba accepted the buyout offer, valuing the company at 2 trillion yen ($13.5 billion). While some shareholders were unhappy with the price, Toshiba argued that there was no prospect of a higher offer or competing bid. Toshiba’s Chief Executive Taro Shimada expressed gratitude to shareholders for understanding the company’s position and stated that the company will now take a major step toward a new future with a new shareholder.
Toshiba has acknowledged that its complex relationships with various stakeholders, including shareholders with different opinions, have hindered business operations. The company believes that a stable shareholder base will help them pursue their long-term strategy focused on high-margin digital services. JIP plans to retain CEO Shimada, and analyst Travis Lundy expects that the prospect of management and new ownership alignment will improve morale. However, he also emphasizes that management needs to be able to tell a better story to investors coming out of this deal.
Although not well known overseas, JIP has been involved in corporate carve outs and spin-offs from Japanese conglomerates, including Olympus’s camera business and Sony Group’s laptop computer business. Since 2015, Toshiba has faced accounting scandals, heavy losses, and corporate governance scandals. JIP’s consortium includes 20 Japanese companies, led by chipmaker Rohm, financial services firm Orix, and Chubu Electric Power. This deal will be the largest M&A deal in Japan this year, and Japan has been the only major market in Asia to experience growth in mergers and acquisitions. Private equity deals have been particularly active, including a planned $6.4 billion buyout of materials maker JSR by a government-backed fund.
In conclusion, Toshiba’s successful tender offer from Japan Industrial Partners allows the company to go private and puts it in domestic hands. This deal marks a significant step for Toshiba after years of battles with overseas activist investors. The company aims to pursue its long-term strategy with a stable shareholder base. JIP plans to retain CEO Shimada, and the deal is expected to improve morale and investor confidence.
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