Toshiba’s $14 Billion Tender Offer from Japan Industrial Partners Ends in Success

Electronics and energy giant Toshiba said on Thursday that a $14 billion tender offer from private equity firm Japan Industrial Partners (JIP) had ended in success – a deal that paves the way for the embattled industrial conglomerate to go private.

JIP-Led Consortium Secures Majority Shares

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 squeeze out remaining shareholders.

Toshiba Set to Be Delisted

The deal puts the 148-year-old electronics-to-power stations maker in domestic hands after years of battles with overseas activist investors. Toshiba is set to be delisted as early as December.

Escape from Mutual Bearhug

“Activist shareholders and Toshiba were stuck with each other for years. This takeover allows both sides to escape their mutual bearhug,” said analyst Travis Lundy of Quiddity Advisors, who publishes on Smartkarma.

Toshiba Accepts $13.5 Billion Buyout Offer

Toshiba in March accepted the buyout offer 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 competing bid.

New Future with a New Shareholder

“We are deeply grateful to many of our shareholders for being understanding of the company’s position,” Toshiba Chief Executive Taro Shimada said in a statement on Thursday. Toshiba “will now take a major step toward a new future with a new shareholder,” he added.

Stable Shareholder Base to Pursue Long-Term Strategy

Toshiba has said its complex relationships with various stakeholders, including shareholders with different opinions, have hampered business operations and that a stable shareholder base would help the company pursue its long-term strategy centered on high-margin digital services.

JIP Plans to Retain CEO Shimada

“I expect the prospect of management and new ownership alignment will improve morale. However, to succeed, management needs to be able to tell a better story to investors coming out of this,” Lundy said.

JIP’s Involvement in Corporate Carve-Outs and Spin-Offs

Although not well known overseas, JIP has been involved in corporate carve-outs and spin-offs from Japanese conglomerates, including Olympus’s camera business and Sony Group’s laptop computer business.

Toshiba’s Turbulent Journey

Since 2015, Toshiba has been battered by accounting scandals, suffered heavy losses and came close to being delisted. It has also been engulfed in a series of corporate governance scandals.

JIP-Led Consortium and Largest M&A Deal in Japan in 2021

JIP’s consortium includes 20 Japanese companies, led by chipmaker Rohm, financial services firm Orix, and Chubu Electric Power. It will mark the largest M&A deal in Japan this year. Japan has been the only major market in Asia to have seen growth in mergers and acquisitions for the year to date, according to LSEG data.

Active Private Equity Deals in Japan

Deals involving private equity have been particularly active, including a planned $6.4 billion buyout of materials maker JSR by a government-backed fund.