Japanese conglomerate Toshiba has confirmed recent reports of the company being made an offer of about $20bn for an acquisition by a British private equity fund. After confirming the bid by CVC Capital Partners that it got, trading in the stocks of the scandal hit firm was temporarily halted on Tokyo’s stock exchange.
According to reports, Toshiba will be able to focus its business on renewable energy and other core businesses areas if the deal goes through.
There was an almost 20 per cent jump in the US listed stocks of Toshiba after the firm confirmed the news.
In recent years, a number of scandals have rocked the company which included an accounting scandal and huge losses originating from its nuclear business in the United States. And to make up for the loss, the company was forced to divest its profitmaking chip business.
The offer from CVC Capital Partners was confirmed by Toshiba’s chief executive and president Nobuaki Kurumatani – which is also a former employees of the British fund. “We’ll discuss it in a board meeting,” Kurumatani added.
CVC’s main office is in London although Luxembourg is its official headquarters.
As a conglomerate – Toshiba, one of the oldest and largest firms of Japan, has business interest in a wide range of areas from home electronics to nuclear power stations.
Corporate Japan was rocked by the company’s accounting scandal in 2015in which the company had admitted that it had overstated its profits for a period of six years. The company was forced to sell its best business – its memory-chip unit, as the company was on the brink of bankruptcy and was about to be delisted from the Tokyo Stock Exchange.
Despite this in 2017, the stocks of the company were demoted to the Tokyo Stock Exchange’s second tier and were returned to the first section only in January this year.
Nobuaki Kurumatani – the first outsider to lead the company in 50 years, was instrumental in leading the recovery of the company. He joined from CVC Capital Partners in 2018 and has worked to regain investor confidence.
If the deal with CVC goes through, it would be among the top 20 largest leveraged buyouts in history. But the deal will require approval from the3 Japanese government because of Toshiba’s involvement in nuclear power stations.
Once synonymous with the global ascent of corporate Japan, Toshiba has since been forced to diversify into multiple business areas. Its last remaining stake in the personal computer maker Dynabook was sold last year by the Japanese electronics giant. That meant a complete exit of the company from the market of PCs or laptops.
There has been pressure on Toshiba for greater transparency and better governance from large overseas shareholders.
On the other hand, VC aims to further expand into the Japanese market after it had acquired a low-cost skincare brand Shiseido’s lower-priced skincare and shampoo brands for $1.5bn.
(Adapted from BBC.com)