Business

According to Reuters sources


© Reuters. FILE PHOTO: The logo of Toshiba Corp is displayed on top of the company’s facility building in Kawasaki, Japan, June 24, 2022. REUTERS/Issei Kato/File Photo

By Mayu Sakoda, Makiko Yamazaki and Takaya Yamaguchi

TOKYO (Reuters) – Disagreement over whether to keep management rights of Toshiba (OTC:) Corp following a potential acquisition has caused friction between two of its proponents and is now causing friction in the region. concerns among banks, the sources said, complicate an already uncertain process.

Japan Industrial Partners, the private equity firm selected by Toshiba as the preferred contractor, initially partnered with state-owned investment fund Japan Investment Corp in a first round of bidding earlier this year.

But the two parted for the second turn. Differences over JIP’s plans to retain Toshiba CEO Taro Shimada and his team are the cause of friction between the two contractors, according to two sources familiar with the negotiations.

The JIP’s plan has since raised alarms among some of Japan’s major banks, whose capital will be crucial to financing the $15 billion acquisition of the company, according to the report. two sources familiar with the negotiations and another.

Some with an eye on Toshiba are concerned that current management practices could hinder the extensive reorganization needed to put it on the path to recovery, three of the sources said.

All disclaimers are identified because the information is confidential.

A representative for JIP was not immediately available for comment. Toshiba and the state-backed JIC declined to comment.

The outcome of any deal could have far-reaching implications for Toshiba’s 116,000 employees and national security, as the nuclear-chip corporation also manufactures defense equipment.

Once a giant of Japanese manufacturing, Toshiba has lurched from crisis to crisis since the 2015 accounting scandal. It has been weakened by years of discord between management and major shareholders, many of whom are foreign activists, are seen as wanting to buy.

The sources said that, despite being selected as the preferred contractor, JIP has struggled to secure enough fair commitments from potential partners. Sources said it now looks set to miss Monday’s deadline for a company proposal that includes letters of commitment from the banks.

JIP, which previously acquired Olympus Corp’s camera business and Sony (NYSE 🙂 Group Corp’s laptop business will continue to try to secure equity and financial commitments beyond the deadline, two of the sources said.

JIP has invited several domestic companies, including a financial services company Orix (NYSE 🙂 Corp and utility company Chubu Electric Power Co Inc join its alliance.

Toshiba’s Shimada told the Wall Street Journal in June that he wants any buyer to keep the group in a single division because he aims to drive innovation at the 147-year-old company.

The state-backed JIC, which has been in talks with US private equity fund Bain Capital and North Asia fund MBK Partners to form a separate consortium, is also preparing a bid, but is unlikely to submit one. proposed binding on Monday, two of the sources said.

The Japanese government owns 96% of JIC’s shares. The Commerce Department said the fund cannot spend taxpayer money on a deal just to take a company private and make things easier to manage. Any investment must fulfill policy goals, such as spurring restructuring, it said.

JIC hopes to do a more detailed assessment of Toshiba’s businesses, including the impact of slumping global semiconductor demand on the value of Toshiba’s 40.6% stake in the flash memory chip maker. Kioxia Holdings Corp, one of the sources said.

At the end of October, JIC expanded the size of its buyback fund to 900 billion yen ($6.11 billion) from 200 billion yen. Two of the sources said the expansion is not only aimed at acquiring Toshiba, but also aimed at other transactions.



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