Toshiba forced to seek alternative to $20bn takeover bid

Photo: AP

The pressure on Japanese electronics conglomerate Toshiba is increasing as major shareholders urged the management to seek new options for potential buyers to compete to the $20bn buyout offer from CVC Capital partners, Reuters reported. The intentions of CVC were to take off Toshiba from the stock exchange and transform it in a private company in a move to improve corporate governance and improve market performance.

US hedge fund Farallon Capital Management said in a statement the Japanese conglomerate should evaluate “the privatisation proposal in a sincere manner through a fair process that includes a proactive market check and formation of an independent special committee.”

Farallon, Toshiba’s third-largest shareholder with a stake of around 6% according to a Reuters source is the first large investor to publicly comment on CVC’s unsolicited offer of $45.68 per share, a 30% premium on its earlier value.

Taking Toshiba private would improve its governance and capital allocation by “further aligning the interests of shareholders and management,” Farallon said. Investors say a deal of this size would lure other potential suitors. When a change-of-control is likely to occur, the target is usually required to seek and achieve the highest price reasonably available from any and all parties. However, Japan does not have this legal principle as a compulsory requirement. This can leave the standard for board decisions unclear, leading to less value for shareholders.

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