A consortium of investors led by private equity company Japan Industrial Partners (JIP) is taking the conglomerate private, together with financial services firm Orix, utility Chubu Electric Power, and chipmaker Rohm.
Toshiba was delisted from the Tokyo Stock Exchange on Wednesday after 74 years, following a decade of upheaval and scandal that brought down one of Japan’s largest companies and ushered in a buyout and an uncertain future. A consortium of investors led by private equity company Japan Industrial Partners (JIP) is taking the conglomerate private, together with financial services firm Orix, utility Chubu Electric Power, and chipmaker Rohm.
Toshiba is now in local hands following a protracted battle with outside activist investors that paralyzed the creator of batteries, electronics, nuclear, and defense equipment. Toshiba said in a statement that it “will now take a major step toward a new future with a new shareholder” and that it would appreciate continued understanding and support from its stakeholders.
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Toshiba’s shares closed at 4,590 yen on Tuesday, down 0.1% from the previous day. Although it is unclear what form Toshiba will take under its new owners, Chief Executive Taro Shimada, who will remain in his position following the acquisition, is likely to focus on high-margin digital services. JIP’s support for Shimada interrupted its previous plan to collaborate with a state-backed fund. According to some industry insiders, dividing Toshiba apart may be a preferable solution.
“Toshiba’s difficulties were ultimately caused by a combination of bad strategic decisions and bad luck,” said Damian Thong, Macquarie Capital Securities’ head of Japan research.
“I hope that through divestitures, Toshiba’s assets and human talent can find new homes where their full potential can be unleashed.” The Japanese government will be keeping a careful eye on the situation. Around 106,000 people work for the corporation, and some of its operations are considered crucial to national security.
Four JIP executives will join the board, as will one representative from each of the investors, Orix and Chubu Electric. A top adviser from Toshiba’s principal lender, Sumitomo Mitsui Financial Group, will join the new management team. Toshiba has already started moving, partnering with Rohm to invest $2.7 billion in manufacturing facilities to develop power chips together.
According to Ulrike Schaede, a professor of Japanese business at the University of California, San Diego, the corporation has to exit lower-margin sectors and build stronger sales plans for some of its innovative products. “If management can figure out a way to let those engineers truly engage in breakthrough innovation activities, they can emerge as an important player,” said Schaede.
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