On Thursday, shares of Toshiba (OTC: TOSYY) Corp. went up after it was said that a group of domestic investors were looking at a $19 billion bid. If this deal went through, foreign activist shareholders would likely be bought out after years of conflict.
In the second round of bidding, a group led by the private equity firm Japan Industrial Partners and including Chubu Electric Power Co. was chosen as the preferred bidder, according to Kyodo News Agency and other news sources.
Kyodo said the price would be 2.8 trillion yen, which would be 26% more than Wednesday’s closing price.
In afternoon trading, the shares were up 7%, which would be their biggest one-day gain in more than a year. This year, they have gone up by about 17%.
Toshiba used to be a well-known conglomerate, but accounting and governance scandals have hurt the company. In the past few years, disagreements between the company’s management and its many activist shareholders have made it harder for the company to turn things around.
Kyodo said that the consortium will put up about 1 trillion yen in equity and that the rest of the money will likely come from bank loans. It also said that financing talks were still going on and that the offer price could change depending on how Toshiba’s stock price moves in the future.
Toshiba has chosen not to say anything about the report.
It wasn’t clear right away how many bids Toshiba is seriously considering, but Travis Lundy, an analyst for Quiddity Advisors who writes on the Smartkarma platform, said that the race to take over the company is likely still open between Japan Industrial Partners and the state-backed Japan Investment Corp.
Sources say that the two used to work together to bid for Toshiba but have since gone their separate ways. Local media say that since then, Japan Investment Corp. has been in talks with private equity firm Bain Capital. Bain Capital is one of several overseas funds that made it through the first round of bidding.
Toshiba and activist shareholders have been at odds over where the company should go. Several large foreign funds have been pushing the conglomerate to consider private equity bids.
Tensions reached a peak last year when a shareholder-ordered investigation found that management had worked with Japan’s trade ministry, which sees the company’s nuclear and defence technology as a strategic asset, to stop overseas investors from having a say at its 2020 shareholder meeting.
Lundy said, “The only way to get rid of the protesters is to pay them off.”
($1 = 146.8300 yen)
