(Reuters) – Japan’s Toshiba (OTC:TOSYY) said on Monday a $14 billion tender offer to take the industrial conglomerate private will be launched on Tuesday – an effort that will, if successful, buy out activist investors and return it to domestic hands.
Toshiba’s board initially said private equity firm Japan Industrial Partners’ 4,620 yen-per-share bid was too low to recommend to shareholders. But it later concluded the price was “fair” as there were no prospects of a higher offer amid unfavourable economic conditions.
At least two-thirds of shareholders will need to tender their shares for the bid to succeed. Although the outcome is not clear, a successful bid would help draw a line under years of upheaval for Toshiba.
“Today marks a turning point for Toshiba. The company is coming out of a tunnel after eight years,” Akihiro Watanabe, chairperson of the board, told a news conference.
“For those shareholders who have yet to make up their minds, I would ask them to read the material that has been disclosed and make a firm decision,” he added.
Toshiba’s shares closed below the offer price at 4,584 yen on Monday before the announcement of the tender schedule, an indication that investors are uncertain the bid will succeed.
But some activist shareholders, although not satisfied with the price, are tired of years of battles with the company and are eager to exit, sources familiar with the matter have said.
The tender offer, which values the electronics-to-power stations maker at 2 trillion yen, will run until Sept. 20. It was originally scheduled to start in late July, but was pushed back due to a regulatory delay.
The announcement coincided with Toshiba reporting its fourth straight quarter of operating profit. Operating income climbed to 11.4 billion yen ($80 million) compared with a loss of 4.8 billion yen in the same period a year earlier when it suffered from higher materials costs.
But it plunged to a net loss of 25.4 billion yen, battered by a large investment loss from its 40.6% stake in memory chip maker Kioxia Holdings which has seen demand slide.
Some 20 Japanese companies will take part in the tender offer. Major contributors include chipmaker Rohm with 300 billion yen and financial services firm Orix (NYSE:IX) with 200 billion yen. Many are longtime business partners who are eager to keep ties with Toshiba, the sources said.
Toshiba has been embroiled in a range of crises since 2015, including accounting debacles, the bankruptcy of its U.S. nuclear power unit and a major governance scandal in which a shareholder-commissioned probe found Toshiba colluded with Japan’s trade ministry to block overseas investors from gaining influence.
($1 = 142.2200 yen)
