One of Japan’s most enduring and largest corporations Toshiba, is poised to bring down the curtain on its 74-year history on the stock market, following a majority stake acquisition by a consortium. Toshiba shares could call it a day on the stock market to be delisted as early as December. The trading history of Toshiba’s stock market began in May 1949, on the heels of the resurgence of the Tokyo Stock Exchange after Japan emerged from the aftermath of WWII. The inroads of private investors will put the 148-year-old Toshiba into the stakes of domesticity following years of conflict with overseas activist investors.
Toshiba Helped In Japan’s Economic Recovery
Established in 1875 as a manufacturer of telegraph equipment, Toshiba’s origins are deeply rooted. The company’s diverse interests span from consumer electronics to nuclear power plants, and for many decades following WWII, it was a rising symbol of Japan’s economic recovery and its prominence in the technology sector. In 1985, Toshiba introduced what it described as the “world’s first mass-market laptop computer”.
Toshiba disclosed that a consortium of 20 Japanese companies led by Japan Industrial Partners (JIP), a private equity firm, has tendered 78.65 percent of its shares.
In March, Toshiba accepted the buyout offer from JIP even though shareholders expressed their disdain for the price. Toshiba argued that there was no prospect of a competing bid or a higher price.
Suffice it to say, after being privy to more than two-thirds of the company, the Toshiba JIP deal was waiting to happen when the consortium finalized a 2 trillion yen ($13.5 billion) transaction to privatize Toshiba.
“The company will now embark on a significant journey towards a new future with a new major shareholder.”
– Taro Shimada, Toshiba’s president and CEO
Japan has been the only Asian major market to have seen success in mergers and acquisitions to date, and the Toshiba JIP deal will mark the largest M&A in Japan for 2023. JIP will retain CEO Shimada.
Many industry experts expect Toshiba’s new ownership to improve morale. However, the management will need to be able to tell a better story to investors coming out of the deal that takes Toshiba off the Tokyo stock exchange.
JIP has been in the thick of Japanese conglomerates’ corporate carve-outs and spin-offs including Sony Group’s 6758.T laptop computer business and Olympus’s 7733.T camera business.
A Goodbye To Toshiba’s Stock Market Journey: Turbulent Times
The Tokyo Stock Exchange-listed conglomerate has encountered several substantial challenges in recent years. Activist shareholders and Toshiba were stuck in conflict with each other for years.
“Toshiba’s crisis is a result of inadequate corporate governance at the highest level.”
– Gerhard Fasol of Eurotechnology, Japan
In 2015, the company admitted to inflating its profits by over $1 billion over a six-year period and was subjected to a 7.37 billion yen ($47 million; £38 million) fine, the largest in the nation’s history at the time.
Two years later, it revealed substantial losses in its US nuclear power subsidiary, Westinghouse, resulting in a 700 billion yen write-down. To avert bankruptcy, Toshiba sold its prized memory chip business in 2018.
Since then, Toshiba has received multiple takeover offers, including one from the UK-based private equity group CVC Capital Partners in 2021, which it rejected. In the same year, the company was found to have collaborated with the Japanese government to stifle the interests of foreign investors.
“Toshiba is considered a national treasure in the eyes of many Japanese people and especially the government, which is part of the problem.”
Subsequently, the company announced plans to divide itself into three distinct entities. However, shortly afterward, its board revised the plan, opting instead to split the company into two units. Before this new restructuring plan could be executed, the board began contemplating JIP’s proposal to take the company private.
