Toshiba mulls going private after string of shareholder revolts

The firm has established a special committee to "engage" with potential investors and review alternatives

Trade

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8 April 2022

Embattled tech giant Toshiba has said it will set up a special committee to assess potential bids from private equity organisations and other investors.

The move opens the possibility for a landmark deal to take one of Japan’s oldest organisations private.

A new committee is to be led by six existing directors, including the founder of Tiga Investments, Raymond Zage, and the ex-chair of Nobel Group, Paul Brough. The role of the committee, according to Toshiba, is to “engage with potential investors and sponsors and review strategic alternatives”.

Investors have ramped up the pressure for privatisation, and was mentioned in a recent letter to the board from the company’s second-largest shareholder, 3D Investment Partners. Bain Capital is reportedly going to be one of the first investors up for review as the US private equity firm recently secured qualified support for a buyout deal from Toshiba’s largest shareholder, the Singapore-based investment fund Effissimo.

Toshiba, which has an estimated market value of $17 billion, has seen a growing conflict between its leadership team and its major shareholders. The creation of a special committee effectively kills off plans to split the company into separate entities, with proposals for both three and two-way splits heavily criticised by investors.

Part of the issue was trust, with many investors questioning whether the current leadership team would still be accountable for breaking up the company should it result in a much worse business outcome. Effissimo, in particular, stated that the current leadership structure was in no position to make such an “irreversible and momentous” decision.

Some reports suggest that the company is still split over the matter but senior figures feel that privatisation presents the best way forward for a business struggling to resolve a decade-worth of internal troubles.

The Japanese giant was approached in April for a $14 billion takeover by CVC Capital Partners, but investors alleged that top executives took a “leading role in blocking the proposals”, and even went as far as to actively prevent it from being discussed.

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