Toshiba believes that going private may help give the company renewed focus to tackle all of its teeming problems.
Japanese multinational electronics company Toshiba Corporation is set to go private after a successful acquisition by a group of buyers led by Japan Industrial Partners. The deal, worth ¥2 trillion ($13.5 billion) will reverse Toshiba’s status as a publicly-listed company.
Toshiba has officially announced that the JIP-led group now holds 78.65% of the company’s outstanding shares. For the takeover, the group needed to purchase more than two-thirds of the company. The bid began on the 8th of August and saw the group paying ¥4,620 ($31.26) per share.
Founded in July 1875, the multinational company is 148 years old and has been publicly listed for 74 years. However, the firm has had its fair share of troubles for nearly a decade. In 2015, news began to spread about accounting malpractice at the company. Toshiba had altered its books for more than seven years, faking profits of hundreds of billions of yen. By July of that year, CEO Hisao Tanaka announced his resignation, along with several senior officials.
When the scandal came to light, the JPX-Nikkei Index 400, an index that selects companies based on market value, return on equity, and operating income, removed Toshiba. Also, Toshiba had to sell US electric plant maker Westinghouse after suffering a significant loss and was forced to raise foreign capital worth ¥600 billion.
Toshiba Hopes Going Private Would Solve Problems
Unfortunately, Toshiba suffered more problems. The company experienced a heavy image dent after reports that it conspired with government players to influence foreign voter behavior. All of these problems shrouded Toshiba in so much controversy that it began to struggle. The firm even had to sell some of its businesses, including involvement in memory chips, medical equipment, and nuclear construction, simply to stay afloat.
Toshiba’s sales fell to ¥3.4 trillion in fiscal 2022. This is an over 55% plunge from the ¥7.6 trillion for the fiscal year that began in April 2007.
Executives at Toshiba believe that the company’s withdrawal from public listing will allow it to properly plan for the future and strategize its business. Reportedly, Toshiba was initially disappointed with the ¥4,620 acquisition price. However, the Toshiba board later encouraged shareholders to join the offer. In a statement, Toshiba CEO Taro Shimada thanked shareholders and promised a “new future”. He stated:
“We are deeply grateful to many of our shareholders for being understanding of the company’s position in this matter. The company will implement a series of procedures for the privatization of the company’s shares going forward. Toshiba Group will now take a major step toward a new future with a new shareholder.”
Whether or not the decision to take Toshiba private would solve the company’s woes is unclear at the moment. In a statement published last month, the JIP-led group announced its plan to quickly implement a growth strategy after the deal. The group also promised to “establish a stable management structure”. Furthermore, there are plans to develop each Toshiba business by understanding the company’s customers better and that it would also make the workplace more rewarding for employees and executives.
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