Troubled Toshiba mulls £13bn acquisition offer by private equity firm

Nikkei reported that CVC Capital Partners made an offer to acquire the company entirely for two trillion yen (£13bn). CVC, which has committed nearly £117bn in funds, holds investments in Avast, Formula One Group and many others. Toshiba president Nobuaki Kurumatani served as head of CVC in Japan until 2018.

Toshiba said this week that it has asked for further details of the proposal and that it will give it “careful consideration” and make an announcement in due course. In the meantime, trading in Toshiba shares has been suspended.

Toshiba, which is headquartered in Luxembourg, is one of Japan’s largest brands. It is recognised as the inventor of flash memory and its extremely broad portfolio includes civil engineering solutions; nuclear power; home electronics; IT services; power transmission and distribution; medical equipment; industrial systems, and more recently emerging technologies such as quantum cryptography, solid-state lidar, and hydrogen fuel cells.

However, Toshiba has been struggling with setbacks and criticism in recent years. It acknowledged in 2015 that it had been severely and systematically cooking the books to meet overambitious financial targets; the Fukushima nuclear disaster in Fukushima has shaken its nuclear business, with the company tasked with decommissioning Japanese nuclear plants, and its US subsidiary Westinghouse (acquired in 2005) filed for bankruptcy protection in 2017, setting in motion a long financial crisis which forced it to sell assets such as its memory chip division in an effort to avoid bankruptcy.

This year, Toshiba submitted to an independent investigation into possible interference with shareholder voting rights. Under these challenging circumstances, it is unsurprising that the company would consider offers of privatisation, which could deliver it from the scrutiny and anger of its largest shareholders.

Atul Goyal, an analyst with Jefferies, stated that the reported offer from CVC is at a premium, but launching an offer for tender will require regulatory approval, adding: “Privatisation could be positive as it may provide Toshiba much needed flexibility and cover from [the] limelight.”

According to the Financial Times, CVC is joined by KKR and other private equity funds in what could prove to be Japan’s largest buyout in history. CVC is expected to form a consortium with corporate and financial partners to finance the buyout.