Toshiba eyes a $21bn takeover deal with CVC

Photo: AP

The troubled Japanese industrial conglomerate Toshiba eyes a lucrative $20 billion offer from private equity firm CVC Capital Partners, Reuters reported. The offer envisages a large premium for stockholders. The proposed deal, which comes three weeks after shareholders approved an independent probe into the scandal-hit company, could shield managers, particularly Chief Executive Nobuaki Kurumatani, from that scrutiny. It would, however, invite regulatory review given its government work.

“Toshiba received an initial proposal, and will ask for further clarification and give it careful consideration,” Toshiba said in a statement, without providing further details.  CVC is considering a 30% premium over Toshiba’s current share price in a tender offer, putting the value of the deal at nearly $21 billion.

If they accepted the current offer it would still be the biggest private equity-led deal in Asia Pacific this year, surpassing Blackstone’s $6 billion offer for Crown Resorts Ltd in Australia, according to Refinitiv data. It would also be CVC’s biggest foray into the region so far.

For CVC, which declined to comment, the proposal represents another chance to expand in Japan where large companies are under pressure to sell non-core assets and improve returns to shareholders. Other deals by the private equity firm include the $1.5 billion purchase of Shiseido lower-priced skincare and shampoo brands. Any approval by Toshiba’s board will face regulatory review, because Toshiba, which makes products ranging from escalators to sewerage plants, is one of only a handful of companies able to build nuclear reactors and manufacturers other sensitive equipment, including lithium-ion batteries for Japan’s military submarines.

On 18 March, 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. That pressure included contacts from a government adviser and Japan’s trade ministry, sources previously told Reuters.

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