Toshiba To Accept Takeover Offer From JIP For USD 15.3B

Toshiba is expected to accept a takeover offer from a consortium led by Japan Industrial Partners (JIP), according to sources on Thursday.

The resolution was approved at the day's board meeting. The acquisition is valued at around 2 trillion yen ($15.3 billion). JIP is expected to launch a takeover bid and eventually take Toshiba private.

Toshiba's restructuring will come to an end with this move. The process began in the spring of 2021, when the company received its first takeover bid.

Following discussions with an outside special committee, the 12-member board of directors, which includes internal Toshiba directors, decided to recommend the JIP proposal to shareholders. The company appears to have determined that a JIP acquisition would increase its corporate value and

JIP will now move forward with the application process, which will involve international competition laws. JIP will purchase shares from existing shareholders and take Toshiba private as soon as it receives approval.

The acquisition will be funded by approximately 20 Japanese companies, including Orix, Rohm, and Chubu Electric Power, as well as Japanese bank loans. The plan is to increase Toshiba's value by collaborating with the investing firms.

Toshiba, which has a number of activist shareholders, will be owned by a single company, which will make decision-making easier.

Toshiba began publicly soliciting restructuring proposals, including delisting, in April of last year. In November, JIP, which had obtained preferential negotiating rights through the bidding process, made a takeover offer. It submitted a final proposal in February after receiving loan commitments from financial institutions.

CVC Capital Partners, based in Europe, made an initial takeover bid for Toshiba in April 2021, but negotiations were later de facto halted. Toshiba announced a plan to split the entire group into three companies in November of the same year in order to increase its value.

That plan was revised in February 2022 to split the company in half, and the idea was presented at an extraordinary shareholders meeting one month later. However, the plan was rejected by a majority of shareholders. Going private became the primary option for restructuring at that point.

Toshiba entered a financial crisis in 2015 after accounting irregularities were discovered and its U.S. nuclear power plant subsidiary suffered massive losses. To avoid insolvency for the second year in a row, the company increased its capital by approximately 600 billion yen in 2017.

Multiple activist investors became Toshiba shareholders, and their preferences heavily influenced the company's management strategy.