Public-to-Private
Troubled Toshiba agrees to record $15B+ PE take-private
March 23, 2023
Toshiba has accepted an offer from a group led by Japan Industrial Partners in what would be Japan's biggest PE-backed take-private.
The consortium first offered to buy the struggling industrial giant in October and then made a formal offer of 2 trillion yen (around $15.3 billion) Feb. 9 after securing $10.7 billion in loans.
If completed, the deal promises to conclude years of turmoil for Toshiba. Last month, the company's COO resigned over an expenses scandal and, days later, Toshiba reported a 90% drop in its quarterly operating profit, further tanking its share price.
However, the company's troubles date back to 2015, when it first got embroiled in an accounting scandal. The following year, Toshiba had to write down its nuclear business after it was badly affected by the 2011 Fukushima earthquake. The conglomerate has since been under pressure from activist shareholders—most notably hedge funds Farallon and Elliott Management, which together own 10%—to restructure.
There were plans to split its core business into three segments, but this was ultimately rejected by shareholders, who opted for a change in management and restructuring.
CVC Capital Partners was the first to target Toshiba for a take-private, making a bid in early 2021 that, at the time, valued the business at around $20 billion. However, CVC withdrew its offer after Toshiba brought in a leadership change.
Other PE suitors have included KKR, Blackstone, Apollo Global Management, Bain Capital and Brookfield Asset Management. In May, it was also reported that state-backed Japan Investment Corporation was mulling a bid for the company in a move that would have blocked a PE takeover by an overseas firm.
The deal, which will still require shareholder and regulatory approval, would be Japan's biggest PE-backed take-private by a large margin. The biggest deal of this type previously was KKR's now-ill-fated acquisition of auto parts maker Marelli, which was purchased in 2017 for just over $10 billion. KKR stepped back from bidding for Toshiba in June.
Featured image by MZinchenko/Shutterstock
The consortium first offered to buy the struggling industrial giant in October and then made a formal offer of 2 trillion yen (around $15.3 billion) Feb. 9 after securing $10.7 billion in loans.
If completed, the deal promises to conclude years of turmoil for Toshiba. Last month, the company's COO resigned over an expenses scandal and, days later, Toshiba reported a 90% drop in its quarterly operating profit, further tanking its share price.
However, the company's troubles date back to 2015, when it first got embroiled in an accounting scandal. The following year, Toshiba had to write down its nuclear business after it was badly affected by the 2011 Fukushima earthquake. The conglomerate has since been under pressure from activist shareholders—most notably hedge funds Farallon and Elliott Management, which together own 10%—to restructure.
There were plans to split its core business into three segments, but this was ultimately rejected by shareholders, who opted for a change in management and restructuring.
CVC Capital Partners was the first to target Toshiba for a take-private, making a bid in early 2021 that, at the time, valued the business at around $20 billion. However, CVC withdrew its offer after Toshiba brought in a leadership change.
Other PE suitors have included KKR, Blackstone, Apollo Global Management, Bain Capital and Brookfield Asset Management. In May, it was also reported that state-backed Japan Investment Corporation was mulling a bid for the company in a move that would have blocked a PE takeover by an overseas firm.
The deal, which will still require shareholder and regulatory approval, would be Japan's biggest PE-backed take-private by a large margin. The biggest deal of this type previously was KKR's now-ill-fated acquisition of auto parts maker Marelli, which was purchased in 2017 for just over $10 billion. KKR stepped back from bidding for Toshiba in June.
Featured image by MZinchenko/Shutterstock
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