Toshiba announced on Wednesday that it accepted a $14 billion takeover deal from a consortium led by private equity firm Japan Industrial Partners. The buyout offer will see 78.65 per cent of Toshiba shares tendered, equating to more than two thirds of the company, which means Toshiba will go private after nearly eight decades on the stock market.
Toshiba is one of Japan’s oldest and largest firms, though the electronics and energy giant has faced several challenges and controversy in recent years. Trouble began as early as 2015 when the company admitted it overstated profits by $1.9 billion over a seven-year period. All the while facing numerous scandals related to its nuclear power business, suffering multiple heavy losses as a result.
For one, it currently faces the daunting and costly task of decommissioning its Fukushima Dai-chi nuclear power plant, in addition to opposing fishing groups and overseas activists for pumping nuclear waste into the ocean, amidst fear of potential irreparable damage to the surrounding areas and wildlife. The Japanese government and UN have greenlighted the task agreeing that the treatment and dilution of waste water meets the requirements of international standards, confirming the environmental impact is negligibly small.
Meanwhile, Toshiba’s US nuclear arm, Westinghouse, filed for bankruptcy in 2017, and since 2018, a UK nuclear power station project in Cumbria still hangs in limbo due to the company’s financial strains, resulting in a £100 million investment / loss for the company thus far. Not forgetting to mention that its NAND flash business, Kioxia, also faces financial uncertainty due to a rapid decline in demand. The memory business has since attempted a merger with Western Digital.
Nonetheless, according to a report by Reuters, Toshiba accepted the buyout offer valuing the firm at $13.5 billion. Although some of its primary shareholders were unhappy, disagreeing that the company was undervalued, Toshiba argued that there was no prospect of a higher offer or competing bid.
“We are deeply grateful to many of our shareholders for being understanding of the company’s position,” said chief executive Taro Shimada in a statement on Thursday. Toshiba “will now take a major step toward a new future with a new shareholder,” he added.
Under the new deal, the company’s shares could be delisted from the market within the month, in what marks a new chapter for a brand that has been synonymous with technology for as long as we can remember.