TOKYO • Toshiba is considering a US$20 billion (S$26.8 billion) offer from private equity firm CVC Capital Partners to take it private, a person familiar with the matter said, as the Japanese industrial group faces pressure from activist shareholders to improve governance.
The proposed deal, which comes three weeks after shareholders approved an independent probe into the scandal-hit company, could shield management, 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," the company said in a statement yesterday.
Toshiba's board, which includes Mr Kurumatani, who worked for CVC before, and Mr Yoshiaki Fujimori, a senior adviser at the private equity firm, discussed the proposal yesterday, said the source with knowledge of the proposal.
Shares in Toshiba soared 18 per cent to their daily limit yesterday.
CVC is considering a 30 per cent premium over Toshiba's current share price in a tender offer, putting the value of the deal at nearly 2.3 trillion yen (S$27 billion) based on Tuesday's closing price of 3,830 yen, said the source, who declined to be identified.
LightStream Research analyst Mio Kato, who publishes on investment research platform Smartkarma, described that offer price as too low. "We believe that current shareholders, especially activists, will want a rather steep price," he said in a research note.
If they accept the current offer, it would still be the biggest private equity-led deal in the Asia-Pacific region this year, surpassing Blackstone's US$6 billion offer for Crown Resorts 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 firms are under pressure to sell non-core assets and improve returns to shareholders.
Other deals by the private equity firm include the US$1.5 billion purchase of Shiseido's lower-priced skincare and shampoo brands.
Any approval by Toshiba's board will face regulatory review, because the group, which makes products ranging from escalators to sewerage plants, is one of only a handful of companies able to build nuclear reactors, and manufactures other sensitive equipment, including lithium-ion batteries for Japan's military submarines.
Japan's government would want to ensure Toshiba's work on infrastructure is not disrupted, Chief Cabinet Secretary Katsunobu Kato said in a press briefing.
"Even though it faced bankruptcy, Toshiba is still one of Japan's leading companies. It also has many businesses linked to government policies, so it seems a little unrealistic for it to become a foreign-owned private company," said analyst Takuro Hayashi at Iwai Cosmo Securities.