The auction held by Toshiba Corp was meant to spark a race for top-dollar offers among global private equity companies. Instead, it brought months of uncertainty and a single, reduced offer from the company’s Japanese business partners.

The $15 billion deal, led by domestic buyout firm Japan Industrial Partners (JIP) and approved by Toshiba’s board last week, could finally put an end to years of laborious disputes with activist shareholders that have resulted in management reshuffles and strategic reversals. The deal’s ability to resurrect the 147-year-old conglomerate, which has never fully recovered from a 2015 accounting scandal and the bankruptcy of U.S. unit Westinghouse two years later, is less certain.

According to persons familiar with the situation, major activist shareholders are anticipated to quit. Some, notably major shareholder Effissimo Capital Management, stand to profit handsomely after purchasing shares at a discount during the 2017 bailout.

Others may not be so fortunate: the offer price reflects a 15% drop from December 2014, prior to the accounting issue. It is also a 22% discount to the lifetime high set in June of last year.

Many of the 23 companies that have joined JIP in their investment have ties to Toshiba. Some were introduced to JIP by Toshiba’s management, according to some of the people who declined to be identified because the information is private.

According to one source, the trade ministry introduced some of the others.

Long-term business partners like as Chubu Electric Power are among the investors.

“Toshiba has been a very important business partner,” said a person at one of the companies.

Toshiba’s management, including CEO Taro Shimada, will remain in place, but the government retains control of Toshiba’s key defense and nuclear technologies.

“It has been a complete mess,” said analyst Mio Kato of LightStream Research, which publishes on Smartkarma.

According to him, the process featured “too many stakeholders making strong demands of management in ways that conflicted with them other.”

He also claimed that activists “grossly underestimated” the effort and time required to repair Toshiba.

The commerce ministry and major stockholders have both declined to respond.

Toshiba’s board, which includes representatives from Paul Singer’s Elliott Management and Farallon Capital Management, formally accepted JIP’s offer of 4,620 yen per share, valuing it at 2 trillion yen ($15.2 billion), Toshiba said in a statement on Thursday.

But, the board declined to suggest that investors tender their shares, calling even JIP’s initial offer of up to 5,500 yen a share “unsatisfactory,” according to Toshiba.

As Toshiba’s earnings declined, the price was reduced.

Some key shareholders previously told Reuters that 6,000 yen was a necessary benchmark to complete the takeover.

According to several of the persons, senior activist shareholders are tired of the drama and prepared to quit, even at the “shockingly low” price, as one of them put it.

JIP’s bid was the only “complete” bid left at the end of a year-long auction procedure, according to the corporation.

“The situation where the buyers were not able to come to agreement continued for a long time. They’ve now found common ground and the path to restructuring is clearer,” said Takamasa Ikeda, a portfolio manager at GCI Asset Management.

Other multinational private equity firms, like KKR & Co, backed out early, citing antitrust concerns and government surveillance of sensitive technologies.

JIP first collaborated with Japan Investment Corp., a state-backed fund. They later split up because they disagreed on JIP’s intention to keep CEO Shimada and his team.

Later, Japan Investment Corp discussed partnering with Bain Capital, providing the US private equity firm with a much-needed local partner. According to reports, the state-backed fund chose not to participate because it believed its plan for substantial restructuring would not appeal to management.

In 2018, Bain acquired a majority stake in Toshiba’s most valuable asset, its memory chip unit, renaming it Kioxia Holdings.

Toshiba missed the window for a “ideal valuation” when tech stocks were still strong, according to LightStream’s Kato.

JIP was designated the preferred bidder in October, but their plan was met with opposition from banks.

“If management stays and pursues the current strategy, we can’t see how they would improve the company,” one banker said late last year.

According to sources, JIP eventually promised to sell underperforming firms if earnings deteriorated as a condition for receiving 1.2 trillion yen in senior loans from banks.

According to multiple sources, Chief Operating Officer Goro Yanase was instrumental in consolidating the JIP proposal. In February, he abruptly resigned due to unethical usage of entertainment expenses.

According to the company, the retention of Shimada and, prior to his removal, Yanase were bank conditions for the loans.

Toshiba believed that stable owners were preferable to present shareholders “with numerous conflicting viewpoints” in order to halt the turmoil.

According to Toshiba, JIP does not see the necessity for major strategy changes.

(Adapted from Reuters.com)