Toshiba prefers national fund offer for 1 trillion yen buyout
Toshiba Corp. gave preferential trading rights to a Japanese investment fund called Japan Industrial Partners Inc. (JIP) for a possible takeover of the major conglomerate, sources said.
The tech giant has sought proposals for its restructuring after shareholders rejected a management-backed plan following a series of accounting and governance crises.
JIP invited Japanese companies such as Chubu Electric Power Co. and Orix Corp. to join and finance its attempted acquisition of Toshiba.
Analysts said the key to his success is whether JIP will get a big enough sum to buy Toshiba, which means he will likely have to expand his coalition of companies to back his bid.
JIP is an investment fund created in 2002 and specialized in the carve-out of Japanese companies, ie the partial sale of a company.
It acquired the personal computing business of Sony Corp. and created Vaio Corp. in 2014.
Toshiba announced in April that it would seek restructuring proposals, which could include privatization suggestions.
JIP submitted a joint proposal with Japan Investment Corp. (JIC), a state-backed investment fund.
Their proposal proceeded to a second round of bidding in July. However, they later parted ways over differences in direction.
JIP submitted another joint proposal with Japanese companies at the end of September.
According to sources, JIP is inviting a wide range of companies to fund its proposal, including Nippon Life Insurance Co., Chubu Electric and Orix.
Toshiba and JIP are expected to discuss the proposal in detail, but analysts said the determining factors will be the size of JIP’s corporate alliance and securing sufficient funds.
Toshiba’s share price has remained high in recent days, in the range of 5,000 yen ($34) to 5,999 yen per share, on the prospect of an acquisition.
The market value of the company is currently around 2.2 trillion yen.
Some analysts estimate that up to 3 trillion yen will be needed to acquire Toshiba, as additional funds on top of a company’s market value are usually required for an acquisition.
Chubu Electric has decided to contribute tens of billions of yen under JIP’s alliance, sources say.
Chubu Electric has conducted numerous deals with Toshiba, including an agreement for power generation facilities.
However, analysts said there were not many companies that could bring in such large sums. This means that not only Japanese companies, but also foreign companies, including investment funds, could join the alliance.