Toshiba was once celebrated for its pioneering technological advancements, including the development of the world’s first laptop and innovations in flash memory.
The delisting of the conglomerate from the Tokyo Stock Exchange closes a challenging decade for the company, marked by scandals, substantial losses, and disputes with activist shareholders, hampering its ability to innovate.
Japan Industrial Partners Inc.’s (JIP) successful tender offer for Toshiba Corp. marks a significant step toward a ¥2 trillion ($13.5 billion) buyout, ending Toshiba’s 74-year run as a publicly listed entity. With roots dating back to 1875, Toshiba announced that the JIP-led consortium now holds 78.65% of its shares, paving the way for the consortium to acquire the remaining shares, making it Japan’s largest deal this year.
Toshiba recommended that its shareholders accept the offer, even though the buyout price is at the lower end of external experts’ estimates. Toshiba executives acknowledged that the company’s business outlook remains uncertain.
The delisting of the conglomerate from the Tokyo Stock Exchange closes a challenging decade for the company, marked by scandals, substantial losses, and disputes with activist shareholders, hampering its ability to innovate.
However, governance issues may continue to pose challenges. Toshiba’s lenders are reportedly seeking the return of Goro Yanase, the former Chief Operating Officer who resigned earlier this year due to inappropriate entertainment expense claims. Yanase played a crucial role in facilitating the take-private deal and has experience in the company’s nuclear power business, which is vital to any turnaround. Nonetheless, there is internal opposition to Yanase’s return, and the appointment may not be confirmed.
Sumitomo Mitsui Banking Corp. and other banks financing the buyout through ¥1.2 trillion in loans are also advocating for their representatives to assume leadership positions within Toshiba. While discussions are ongoing, no decisions have been reached regarding the management structure post-privatization.
A lengthy auction process left the conglomerate in a state of uncertainty amidst a year of industry-wide transformation driven by growing interest in artificial intelligence. Meanwhile, Toshiba’s chip affiliate, Kioxia Holdings Corp., fell further behind market leaders Samsung Electronics Co. and SK Hynix Inc., and talks of merging with Western Digital Corp.’s flash memory business extended.
Toshiba’s executives and lenders believe that privatization will enable the company to concentrate on long-term strategies. The company, with interests spanning nuclear power plants, power semiconductors, batteries, and hard disk drives, experienced a revolving door of three presidents in as many years.
Once acclaimed for technological breakthroughs, the tech giant faced Japan’s largest-ever financial penalty in 2015 for falsifying financial statements. Subsequently, it encountered a disastrous venture into the nuclear business, resulting in a $6.3 billion write-down and the sale of its prized memory chip business, now known as Kioxia. The company also divested its medical, home appliance, and TV operations.
Activist investors began taking an interest in the troubled firm, prompting the company to announce plans in 2021 to split into three units, which were later revised in favour of a two-way split in 2022. Following the resignation of the CEO at the time, who took responsibility for the chaos, the board initiated the process of soliciting bids to take the company private.
About Toshiba Corp.
Toshiba Corp., established in 1939, is a renowned Japanese conglomerate with a rich history dating back to 1875. Over the years, Toshiba has evolved into a diversified company with interests spanning various sectors, including nuclear power plants, power semiconductors, batteries, and hard disk drives. Toshiba was once celebrated for its pioneering technological advancements, including the development of the world’s first laptop and innovations in flash memory.