Toshiba, one of Japan’s long-standing corporate giants, is poised to conclude its illustrious 74-year history on the stock market. A consortium of investors, led by the private equity firm Japan Industrial Partners (JIP), has successfully acquired a controlling stake of 78.65% in the company.
With ownership exceeding two-thirds of the company, this group has cleared the path for a momentous $14 billion (£11.4 billion) privatization deal. Under this arrangement, Toshiba’s shares may be removed from the stock market as early as the close of this year.
Toshiba’s journey traces back to 1875, initially specializing in telegraph equipment manufacturing. This transformative shift marks a significant turning point for the company.
Taro Shimada, President and CEO of Toshiba, expressed optimism about the company’s future, stating, “Toshiba will now embark on a transformative journey with a new major shareholder.”
Toshiba’s presence on the stock market dates back to May 1949, coinciding with Japan’s post-World War II resurgence and its emergence as a technological powerhouse. The company’s diverse divisions encompassed everything from consumer electronics to nuclear power, serving as a symbol of Japan’s economic revival for decades.
In 1985, Toshiba made history by introducing the “world’s first mass-market laptop computer.”
However, recent years have been marked by significant challenges for the Tokyo-based conglomerate. According to Gerhard Fasol, CEO of business advisory firm Euro technology Japan, “Toshiba’s downfall can be attributed to inadequate corporate governance at the highest level.”
In 2015, Toshiba acknowledged inflating its profits by over $1 billion over a six-year period and faced a substantial fine of 7.37 billion yen ($47 million; £38 million), which was a record penalty for Japan at the time.
Two years later, the company disclosed substantial losses in its US nuclear power subsidiary, Westinghouse, leading to a 700 billion yen write-down.
To avoid bankruptcy, Toshiba sold its prized memory chip business in 2018, considered a jewel in its portfolio.
Subsequently, the company received several takeover offers, including one from UK private equity group CVC Capital Partners in 2021, which it ultimately declined. In the same year, Toshiba was implicated in colluding with the Japanese government to hinder the interests of foreign investors.
The firm initially announced plans to divide itself into three separate entities. However, this scheme was later revised, with the board opting for a division into two units.
Before the revised restructuring could be executed, the board entertained JIP’s proposal to take the company private, recognizing the need for a profound transformation after divesting many core business units, particularly its semiconductor group.
Toshiba’s decision to go private aligns with a broader trend among Japanese companies seeking to evade the obligations associated with public shareholders. In the eyes of many, Toshiba remains a cherished national treasure, a factor contributing to the complexities of its corporate journey, as noted by Mr. Fasol.
Last Updated: 22 September 2023
