Toshiba could be the subject of Japan’s biggest private equity buyout after CVC Capital Partners tabled a $20 billion offer.
The embattled technology and electronics conglomerate issued a statement saying that it had “received an initial proposal” and would “ask for further clarification and give it careful consideration”.
The private equity interest in one of Japan’s most famous companies prompted an immediate government reaction. Hiroshi Kajiyama, the trade minister, said that he would monitor closely any deal involving Toshiba as the company was involved in several infrastructure projects.
Any offer would need to be approved by the government under a law regulating foreign investment in Japanese companies dealing with sensitive technology and products for national security reasons.
Toshiba makes products ranging from escalators to sewerage plants. It also builds nuclear reactors and manufactures other sensitive equipment, including lithium-ion batteries for Japan’s military submarines. Its bosses have been under pressure from activist funds after Westinghouse Electric Company, its American nuclear division, sought bankruptcy protection in 2017 amid cost overruns and delays.
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Its investors include Effissimo, a Singapore-based fund that is the group’s largest shareholder. It has put pressure on Nobuaki Kurumatani, Toshiba’s chief executive, who was hired in 2018 to restore the company’s fortunes. Last month Toshiba shareholders, led by Effissimo, voted in favour of an independent inquiry into allegations that investors had been pressured to agree with management proposals.
CVC’s proposed deal is at a 30 per cent premium over Toshiba’s present share price, putting the value at nearly 2.3 trillion yen (£15.3 billion) based on Tuesday’s closing share price of Y3,830.
Should the deal go ahead, it would be the biggest private equity-led transaction in the Asia Pacific this year, surpassing Blackstone’s $6 billion offer for Crown Resorts in Australia, according to Refinitiv data. It also would be CVC’s biggest foray into the region.
CVC did not comment.
Other recent deals by CVC include the $1.5 billion purchase of lower-priced skincare and shampoo brands from Shiseido, the Japanese beauty company, in February. It raised a €21 billion fund last year for deals in Europe and the Americas and a separate $4.3 billion Asian fund. Established in 1981, CVC has a total of $117.8 billion of assets under management.
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Mio Kato, an analyst at LightStream Research, said that CVC’s offer for Toshiba was too low. “Shareholders, especially activists, will want a rather steep price,” he said in a research note.
CVC already has some links to Toshiba. Kurumatani, 63, joined the company from CVC. Yoshiaki Fujimori, a senior adviser at the private equity firm, is also on its board.