Toshiba Considers Private Buyer As Shareholders Get Testy

In the history of sprawling, amorphous conglomerates, Japan’s Toshiba has had its finger in as many pies as anyone. It has sold everything from laptops to escalators to kettles to X-ray machines to nuclear power.

Now, it’s considering selling something new: itself.

It was revealed Wednesday that Luxembourg-based private equity firm CVC Capital Partners has made a $20 billion offer for the company, in what would be one of the largest leveraged buyouts in history.

Taking the Drama Private

The deal would take Toshiba private at the height of drama — shareholders revolted last month over a litany of concerns, including faulty accounting controversies and billions in writedowns:

• Effissimo Capital, a secretive hedge fund in Singapore that is Toshiba’s biggest shareholder, accused the company of rigging votes at the annual meeting to skirt scrutiny from investors.
• Farallon, a U.S. fund and the second-largest shareholder, accused it of reneging on commitments for how it would deploy capital, citing a “lack of trust” between shareholders and management.

Now the disgruntled could turn into the delighted: CVC is offering shareholders a 30% premium, and Toshiba stock jumped 18% on Wednesday.

It’s Complicated

For the deal to be completed, Toshiba and CVC would have one big hurdle to climb: the Japanese government. Because the company is tapped into sensitive national defense projects and is deeply involved in decommissioning the Fukushima Dai-Ichi nuclear power plant — regulators will need to have a serious think before greenlighting a sale.

the takeaway

CVC, one of the world’s biggest private equity firms with nearly $162 billion in funds committed, has a pretty big in at Toshiba: CEO Nobuaki Kurumatani was chairman of CVC’s Japan unit before he joined the company.