Toshiba announced Thursday that a $14 billion takeover bid from private equity firm Japan Industrial Partners (JIP) was successful – a deal that paves the way for the industrial conglomerate to be taken private in trouble.
The JIP-led consortium saw 78.65% of Toshiba shares tendered, giving the group a majority of more than two-thirds, which would be enough to oust the remaining shareholders.
The deal puts the 148-year-old power plant maker in domestic hands after years of battles with foreign activist investors. Toshiba is expected to be delisted as early as December.
“Activist shareholders and Toshiba have been stuck with each other for years. This takeover allows both parties to escape their mutual embrace,” said analyst Travis Lundy of Quiddity Advisors, who publishes on Smartkarma.
Toshiba accepted the takeover offer in March valuing the industrial conglomerate at 2 trillion yen ($13.5 billion). Although some shareholders were unhappy with the price, Toshiba argued that there was no prospect of a higher offer or a competing offer.
“We are deeply grateful to many of our shareholders for understanding the company’s position,” Toshiba Chief Executive Taro Shimada said in a statement Thursday.
Toshiba “will now take a major step towards a new future with a new shareholder”, he added.
Toshiba said its complex relationships with various stakeholders, including shareholders with different views, have hampered business operations and that a stable shareholding would help the company pursue its long-term strategy focused on high-margin digital services. .
JIP plans to retain CEO Shimada.
“I expect the prospect of alignment of management and new ownership to improve morale. However, to be successful, management must be able to tell a better story to investors,” Lundy said.
Although little known overseas, JIP has been involved in corporate spinoffs and spinoffs of Japanese conglomerates, including Olympus’ camera business and Sony Group’s laptop business.
Since 2015, Toshiba has been rocked by accounting scandals, suffered heavy losses and was nearly delisted. The country has also been mired in a series of corporate governance scandals.
JIP’s consortium includes 20 Japanese companies, led by chipmaker Rohm, financial services company Orix and Chubu Electric Power.
This will be the largest M&A transaction in Japan this year. Japan is the only major market in Asia to see growth in mergers and acquisitions since the start of the year, according to LSEG data.
Transactions involving private equity have been particularly active, including the planned $6.4 billion takeover of materials maker JSR by a government-backed fund.