Shares of Toshiba rose on Friday after the Japanese conglomerate said it would form a special committee to evaluate potential bids from private equity and other investors, opening the for a landmark deal to take one of the country’s biggest industrial names private.
Committee likely to receive its first proposal from US private equity firm Bain Capital last week Guaranteed eligibility for support for an acquisition deal from Toshiba’s largest shareholder, Singapore investment fund Effissimo.
People familiar with the situation say Bain’s bid preparations are at an advanced stage, but they also note the significant technical and political challenges of owning a 146-year-old brand. whose businesses range from infrastructure and refrigeration to nuclear power and defense. .
People close to some of the major PE funds likely involved in discussions with Toshiba say that, given the sensitivity surrounding some of its core businesses, any acquisition would be Success would require a substantial Japanese contingent among its investors.
Tokyo-listed shares of Toshiba rose nearly 4% following the committee’s announcement, before closing 1.9% higher.
People close to Toshiba say that while there are clear divisions on the matter within the company, a growing number of senior figures have concluded that a private deal could provide the best route to the issue. deal with years of business uncertainty and deepen the deadlock with active shareholders.
The announcement by Toshiba, which has a market value of about $17 billion, came late Thursday night and followed a dramatic escalation of pressure for such a move from major investors and a letter sent to Toshiba’s board of directors on Wednesday by the company’s second-largest shareholder, 3D Investment Partners.
The decision by Toshiba’s board of directors opened fire on what the company’s more vocal investors hope will be a battle of spirits between rival investment groups. A strategy review committee convened last year discussed potential acquisitions with PE firms including KKR, Blackstone and Brookfield.
Those conversations, were not enough by several investors, avoided the price issue and the committee concluded in November that no proposal from PE firms was more appealing than the idea of detached Toshiba into three companies – a plan that was quickly abandoned after strong opposition from shareholders.
The new committee, which Toshiba said will “engage with potential investors and sponsors and consider strategic alternatives,” will include the group’s six current independent directors, including: including Tiga Investments founder Raymond Zage and former Noble Group executive chairman Paul Brough.
Toshiba said discussions with potential investors will begin as soon as the fact. A company spokesman said that privatization is not a precondition for the committee, which will consider all possible strategic options.
The decision to form the committee, made at Thursday’s board meeting, does not involve the newly appointed chief executive. Taro Shimadawho has not yet been elected as a member of the board of directors.
The committee will provide the most up-to-date information on potential bids before Toshiba’s annual shareholder meeting in June.
Toshiba alone said that management will develop a new business plan that will be announced before the AGM.