According to three sources with knowledge of the matter, Toshiba Corp is currently in talks with around four private equipment companies, including Blackstone Inc. and KKR & Co Inc. in order to seek new ideas for their strategy. The Japanese conglomerate has also tapped Canadian investment companies Brookfield and Bain Capital. The sources said that a strategic review committee of the scandal-hit firm had been put together for submitting ideas to Toshiba. The purpose of the latest process is not to get any buyout bids for some of the company’s assets or the entire firm.
However, it isn’t immediately clear as to whether this engagement with buyout firms will lead to any formal offers in the future. This step indicates that the company is engaging with potential bidders since its chairman was ousted in June by the shareholders. It was after it was disclosed that Toshiba had colluded with the Japanese government for putting pressure on foreign investors. After the chairman was ousted, the company initiated a complete review of its current assets, since it has numerous lines of businesses and is operating in various jurisdictions.
The company also stated that it would engage with potential financial and strategic investors. According to a statement by Toshiba, their strategic review committee is discussing a number of initiatives without delay. As of Wednesday, the company’s market valuation is around $19 billion and it will present the achievements in October when they announce the new business plan. No comment was made by any of the four investment companies. The sources revealing this information did not wish to be named as the talks were private.
This month at an earnings briefing, Satoshi Tsunakawa, the Chief Executive at Toshiba said that the company had been engaged with vigorous dialogue with shareholders, along with financial and strategic investors. He also added that the company was open to receiving private bids, even though it hadn’t received any offers after CVC Capital Partners’ bid worth $20 billion. This bid had been declined in April, but no details were provided. The previous CEO of the company departed in April due to controversy about the CVC buyout offer.
Earlier, KKR, Brookfield, and Bain Capital had weighed potential bids of taking the company private. At that time, the conglomerate had said that they believed functioning as a publicly-traded company providing a suitable structure for ensuring long-term value creation. Some investors were puzzled due to Toshiba’s decision of talking with private equity funds and they questioned why the company didn’t officially begin the process of eliciting bids.
An investigation in June concluded that Toshiba had colluded with the trade ministry in Japan for blocking investors from gaining influence at the shareholder meeting last year. This finding had put the governance of the company under the spotlight. Toshiba’s products range from sewerage to escalators and it is one of the few manufacturers of nuclear power reactors in Japan and also manufactures defense equipment. Hence, the government would have to give approval for the sale of the company.
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