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CVC makes $18 billion offer to take Toshiba private


(ATF) Private equity firm CVC Capital Partners has proposed a buyout of Toshiba Corporation for about 2 trillion yen ($18 billion), the Japanese company’s president said on Wednesday.

The Luxembourg-based investment firm will discuss terms with the management of the Japanese electronics and infrastructure conglomerate and would be required to engage in talks with the Japanese government about the proposed acquisition.

“It is true we received a proposal and we will discuss that at our board meeting,” Toshiba president Nobuaki Kurumatani told reporters. Prior to taking the helm of Toshiba, Kurumatani served as chairman of CVC’s Japanese unit.

Toshiba has faced pressure from activist shareholders who invested in the conglomerate when it was struggling to get back on its feet, and taking the Japanese firm private could speed up management’s decision-making, the sources said.

The proposed deal comes three weeks after shareholders approved an independent probe into the scandal-hit company.

INDEPENDENT PROBE

On March 18, Toshiba’s shareholders, led by Singapore-based Effissimo Capital Management, voted in favour of an independent probe, opposed by management, into allegations that investors were pressured to agree with management proposals.

“Toshiba’s management now have a legal obligation to comply with this decision by Toshiba’s shareholders and cooperate with the investigation, the investigation period being three months,” Atul Goyal, an equity analyst at Jefferies in Singapore, said.

Toshiba is currently capitalised at about 1.74 trillion yen. A buyer typically pays a premium in a tender offer, potentially pushing the value of a full acquisition of Toshiba shares above 2 trillion yen.

Last year Toshiba said a subsidiary booked fictitious sales of 43.5 billion yen in 26 transactions recorded only on paper. In the troubled conglomerate’s 2015 accounting fraud, Toshiba padded profits by more than 200 billion yen.

“Investors’ confidence in Toshiba appears to be declining,” Goyal said. “We hope that Toshiba makes all possible efforts to reassure its shareholders on governance, transparency and accountability.”

CVC has shown increasing interest in Japanese companies. In February, Shiseido said it would sell its personal care products business, known for brands such as Tsubaki, to CVC for 160 billion yen.

With reporting by Reuters

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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