$15 bn buyout of Toshiba Corp leaves global companies on sidelines

The Japanese bidding consortium also wants to avoid triggering Chinese antitrust scrutiny by bringing in foreign investors

Manuel Baigorri, Takako Taniguchi and Min Jeong Lee | Bloomberg
Photo: Bloomberg

Photo: Bloomberg

The $15 billion buyout of Toshiba Corp. is increasingly looking like a purely Japanese affair as most international buyout firms are poised to drop from the deal, according to people familiar with the matter.
Talks to bring Blackstone Inc., BPEA EQT and CVC Capital Partners on as equity investors have stalled, the people said, asking not to be identified because the matter is private. The bidding group led by homegrown fund Japan Industrial Partners Inc. presently includes domestic firms, the people said.

The private equity investors are concerned about the valuation, complexity and political nature of the deal, some of the people said. The Japanese bidding consortium also wants to avoid triggering Chinese antitrust scrutiny by bringing in foreign investors, they said.
A rival consortium led by Japan Investment Corp. is also seen as less likely to submit a bid, the people said. Foreign firms Bain Capital and MBK Partners have discussed joining JIC’s bid, Bloomberg News has reported.

The sidelining of foreign backers from potentially one of Asia’s biggest deals this year shows how difficult it is for Japanese stakeholders and overseas investors to align, especially where national security is a concern. Global private equity funds have ultimately been frustrated after years of attempting to be part of Toshiba’s revival.
No final decisions have been made and some funds could still find ways to back the deal, such as providing financing, the people said. Representatives for Blackstone, Bain, JIC, JIP and MBK declined to comment, while CVC and BPEA EQT couldn’t immediately comment. A spokesperson for Toshiba said the company can’t comment on candidates as it may undermine a fair process.

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Private equity firms have worked for many years in Japan to change a damaging public perception of the industry, particularly where foreign investors are concerned. Companies such as Shiseido Co. and Hitachi Ltd., both founded more than a century ago, have recently sold parts of their business to buyout firms.
Toshiba earlier this month received a buyout offer led by JIP which values the 148-year-old company at about ¥2 trillion ($14.7 billion), and which includes bank financing worth about ¥1.4 trillion. The JIP-led group has been in talks for a further ¥1 trillion of financing from around 20 potential co-investors including Suzuki Motor Corp. and Iwatani Corp., Bloomberg News has reported. Orix Corp., whose share of the bid was among the biggest in the co-investor lineup, intends to reduce its financial contribution, people familiar with the matter have said.

Toshiba cut its full-year profit forecast on Feb. 14 and said its chief operating officer resigned after an investigation into his expenses. Signs of deterioration in Toshiba’s operations could weaken its ability to push back on demands from banks for asset sales or collateral.

First Published: Feb 28 2023 | 11:25 AM IST

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