Toshiba estimated at $16 billion in a consortium led by JIP in a buyout proposal, sources say

A consortium led by Japan Industrial Partners Inc. is contemplating a takeover of Toshiba Corp. at an estimate of around JPY 2.4 trillion ($16.1 billion) in what could be Asia’s major buyout proposed this year, according to known sources.

The JIP-guided company, which is the preferred bidder to take the Japanese industrial group private, strategizes to provide JPY 1 trillion in cash, while in the quest for financing JPY 1.4 trillion from banks along with a steadfast line of credit of JPY 200 billion in working capital, said sources, who requested not to be identified as the matter is private.

Toshiba’s customary meeting

Toshiba, in its customary meeting with banks including Sumitomo Mitsui Banking Corp. on October 20, notified them that JIP is valuating the company at about JPY 2.4 trillion and asked them to give financing assistance, the sources stated.

Shares of Toshiba have soared nearly 17% this year, providing the corporation with a market value of about $15.7 billion. A bid at JPY 2.4 trillion would be valued at almost JPY 5,541 per share according to Bloomberg estimates, comparable to Toshiba’s closing price of JPY 5,391 per share on Monday in Tokyo.

Equity commitments

JIP has yet to finalize the equity commitments from its partners, while banks remain cautious about making binding commitments, the sources said. Both the consortium led by JIP and a rival group led by state-financed investment fund Japan Investment Corp. will find it challenging to meet a November 07 closing date to line up commitment documents, Bloomberg News stated earlier.

Considerations are still in progress and there is no certainty that negotiations will lead to any transaction, the sources said. Toshiba may perhaps still decide to delve into certain asset sales instead of a full sale of the business, it said.

Representatives for JIP and SMBC declined to comment. A Toshiba representative said in response to a Bloomberg News query that, as a general rule, they cannot answer information about applicants, including co-investors, as it may undermine a reasonable process.

JIP is in discussions to form a partnership with domestic firms including Orix Corp. and Chubu Electric Power Co. as well as global investment companies such as Baring Private Equity Asia and CVC Capital Partners, Bloomberg News has stated. That coalition has put together a proposal that would keep Toshiba’s current business structure intact.

Investors including Bain Capital and MBK Partners have considered being engaged in JIC’s rival bid group, people familiar with the matter have stated.

About Toshiba Corporation

Toshiba Corporation produces and markets electrical and electronic products. The Corporation’s products comprise digital products such as PCs and televisions, NAND flash memories, and system LSIs (large-scale integrated), including social infrastructures such as power generators, medical equipment, and home appliances.