Toshiba To Go Private In $15B Deal

Talks between Toshiba and potential acquirers have been going on for about a year, with JIP Group finally getting the OK for a deal priced lower than what was previously offered before Toshiba saw a financial downturn and a drop in value of its Kioxia semiconductor and hard drive business.

Toshiba Thursday said that it has accepted an offer to be acquired by a consortium of Japanese investors and companies that would take the company private.

However, in a statement on the company’s investment site, Toshiba said there will be a period of at least four months before the offer starts to gather information and reconsider whether or not to recommend shareholders tender their shares based on changing conditions including macroeconomic conditions.

The proposed acquisition includes as the lead investor Japan Industrial Partners, also known as JIP Group. About 20 Japanese companies plan to take part in the deal, according to CNBC, which cited unnamed sources.

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The tender offer price for Toshiba is 4,620 yen per common share. That compared to the current 4,213 yen per share based on the company’s share prices at the close of business day on the Tokyo Stock Exchange.

At that per-share price, the total deal is valued at 2 trillion yen, or about $15.2 billion.

Toshiba consists of 255 subsidiaries as of December 31 in seven business domains including Energy Systems & Solutions, Infrastructure Systems & Solutions, Building Solutions, Retail & Printing Solutions, Electronic Devices & Storage Solutions, Digital Solutions, and Battery Business.

Toshiba said that it has been discussing strategic alternatives for about a year, and on April 21, 2022, its board of directors decided to solicit proposals from potential investors and sponsors as potential partners regarding strategic alternatives. By May of 2022, it had received legally non-binding primary proposals from 10 investment funds including JIP.

Toshiba said that on November 7, after repeatedly asking JIP to raise its tender offer price, received a legally binding offer of 5,200 yen per share with conditions, which Toshiba deemed unsatisfactory.

JIP on March 3 offered a legally binding final proposal letter with a price of 4,610 yen per share, but Toshiba was able to negotiate a final price of 4,620 yen per share.

During the negotiation period, Toshiba said it saw a significant downward revision of its operating income forecast and a downward swing in the value of its shares of Kioxia semiconductor and hard drive business which resulted in a decrease in its corporate value.

Further impacting the JIP offer, according to CNBC, were accounting scandals, including a collusion with Japan’s trade ministry to block overseas investors from gaining influence.

Toshiba’s 40.6-percent share of Kioxia was also an issue given that a series of accounting scandals nearly resulted in Kioxia being delisted, CNBC reported.