Toshiba, a Japanese electronics company, will be delisted from the Tokyo stock market for the first time in 74 years. The move came as the company welcomed Japanese private equity funds as its new owner, and Toshiba is expected to delist and improve its constitution. The new owner of the private equity fund plans to raise Toshiba’s corporate value before being re-listed.
According to Reuters on Monday (local time), Toshiba will be delisted from the Tokyo Stock Exchange on Tuesday and take its position private. It has been 74 years since it was listed on the Tokyo Stock Exchange in 1949. The move comes as the Japanese Industrial Partners (JIP) consortium, a private equity fund, started tender offer in August and officially acquired Toshiba at an extraordinary shareholders’ meeting on April 22. The JIP consortium, which became the majority shareholder of Toshiba, passed the delisting bill at the time. More than 20 Japanese companies are participating in the JIP consortium as investors.
Toshiba was regarded as a representative company in Japan along with Sony and Panasonic. However, after the large-scale fraudulent accounting crisis in 2015, it fell into management difficulties and faced a crisis due to the bankruptcy of Westinghouse, a nuclear power generation subsidiary, in 2016. Since then, it has received a large-scale capital increase from a foreign activist fund in 2017, and there has been a conflict over Toshiba’s management. As a result, discussions on the sale began in 2021, and business reorganization plans, including delisting, were considered.
In the meantime, Bain Capital of the United States and CVC Capital Partners, a British private equity fund, sought to acquire Toshiba, but given Toshiba’s symbolism, the board of directors accepted the JIP consortium’s acquisition proposal. However, JIP presented the Toshiba acquisition proposal in October last year and had difficulty raising funds, but submitted the final acquisition proposal in February this year as it received loan commitments from Japanese banks. Toshiba finally accepted the proposal in March.
It is not clear how Toshiba will change under its new owner, but Taro Shimada, who will retain his position after taking over, is expected to focus on digital services to improve profitability. However, some point out that it is better to separate Toshiba. “Toshiba’s failure was ultimately due to the wrong strategic choice,” Macquarie Capital Japan Research Director Damien Tong told Reuters. “We need to increase its asset value through corporate division and sale.”
Toshiba’s owner has changed and normalized, but some analysts say that the Japanese government will closely watch this. Toshiba has about 106,000 employees, which could lead to massive unemployment if Toshiba is divided. Reuters said, “Toshiba’s semiconductor division is also linked to national security.”
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