Japanese company Toshiba said on Wednesday it would give “careful consideration” to a $20 billion offer led by global private-equity group CVC Capital Partners, at a 30% premium to the troubled conglomerate’s share price.
- If concluded, the deal would come three weeks after Toshiba’s management suffered an unprecedented defeat by activist investors at an extraordinary meeting of shareholders, who voted for an independent probe into the company’s scandal-tainted recent past.
- Activist investors led by Singapore’s Effissimo Capital Management and U.S.-based Farallon Capital, had criticized what they called “suppression” at the company’s shareholders meeting last year, which was due to examine their criticism of Toshiba Chief Executive Nobuki Kurumatani.
- CVC has declined to comment on the offer, first reported by Nikkei Asia. Toshiba shares jumped 18% on Wednesday before trading was suspended in Tokyo because of the influx of ‘buy’ orders.
Kurumatani, 63, served as head of CVC in Japan before joining Toshiba
in 2018. He has since clashed with activist shareholders unhappy with the company’s governance.
The outlook: Toshiba’s wide range of businesses — from nuclear plants to sewage facilities, electronic products, and batteries — makes it likely that the company’s full takeover by a foreign owner will be carefully assessed by the Japanese government, which would have to approve the deal.
Critics of the company’s current management may argue that the mooted deal might help Kurumatani keep his job, although activist funds would book a hefty profit from the buyout, even at its current rumored price, which could be raised at a later stage.
But the current valuation of Toshiba and the nature of its many businesses could also lead to a break up of the Japanese company, which would help to extract value. Depending, of course, on whether the Japanese government agrees on such an outcome.