Toshiba to Be Taken Private, Ending 74 Years of Stock Market History
Toshiba Corp., one of Japan’s oldest and largest conglomerates, is poised to end its 74-year history as a listed company after a majority of its shareholders agreed to a $13.5 billion buyout offer from a domestic private equity group.
The company announced on Thursday that a consortium led by Japan Industrial Partners Inc. (JIP) had acquired 78.65% of its shares, clearing the way for the group to squeeze out the remaining shareholders and take full control of the company. Toshiba is expected to be delisted from the Tokyo Stock Exchange as early as December, ending a troubled chapter in its more than 140-year history.
The deal marks a milestone for corporate governance in Japan, as it was driven by activist investors who challenged Toshiba’s management and demanded higher returns. The company had been under pressure from foreign shareholders, such as Singapore-based funds Effissimo Capital Management Pte and 3D Investment Partners Pte, who called for an independent investigation into allegations that Toshiba had colluded with the government to suppress their interests.
The probe, which was approved by shareholders in March, found that Toshiba had sought to influence the outcome of last year’s board elections with the help of the Ministry of Economy, Trade and Industry (METI), which regarded Toshiba as a strategically important company for national security reasons. The scandal led to the ousting of Toshiba’s chairman Osamu Nagayama and other directors in June, and prompted the company to accept the buyout offer from JIP in July.
Toshiba’s management and lenders have said that privatization will allow the company to focus on its long-term strategy and rebuild its competitiveness in various sectors, such as nuclear power, semiconductors, batteries and hard-disk drives. The company, whose roots go back to 1875, has been battered by accounting scandals, heavy losses and the collapse of its US nuclear business in the past decade. It has also been engulfed in a series of corporate governance crises that have eroded its reputation and market value.
However, some analysts and investors have expressed concerns about the future of Toshiba under JIP’s ownership, as the private equity firm is known for carving out and spinning off businesses from Japanese conglomerates. JIP has previously acquired Toshiba’s laptop computer business and Olympus Corp.’s camera business, among others. Some fear that JIP may sell off Toshiba’s core assets or cut jobs to boost profits, while others question whether JIP has the expertise and vision to revive Toshiba’s innovation and growth potential.
Toshiba’s delisting will also reduce the diversity and depth of Japan’s stock market, as it will lose one of its most iconic and influential companies. Toshiba was once one of the world’s top 20 most valuable companies, and a pioneer in technology inventions such as flash memory and laptops. It was also involved in major social infrastructure projects such as nuclear power plants and bullet trains. Its departure will leave a gap in Japan’s industrial landscape that may be hard to fill.
