CVC Capital Partners weighs $ 20 billion bid For a majority stake in Toshiba that could make the Japanese industrial group private and remove activist investors from its shareholder register, according to two people with knowledge of the talks.
The deal, which would be among the 20 largest leveraged buyouts in history, would mark yet another twist in a corporate saga that has led Toshiba from a scandal with profits in 2015 and the brink of bankruptcy two years later to a humiliating defeat in a showdown with the largest shareholders last month.
CVC is expected to partner with other investment funds to fund the deal, which was first reported by Nikkei Asia. The Luxembourg-based buyout group declined to comment.
In a statement on Wednesday, Toshiba said it would carefully examine an initial proposal it received from CVC a day earlier.
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But Toshiba has been particularly vulnerable. The company’s protracted financial crisis stemming from the collapse of its U.S. nuclear business in 2017 was temporarily resolved when the company engaged Goldman Sachs to run a $ 5.3 billion emergency issue. Dollars in equity.
Although the deal was quickly terminated, it left Toshiba’s shareholder register heavily populated with foreign activist funds – groups that may see the possibility of a lucrative exit if the CVC deal is implemented with a large premium.
Activist investors in Toshiba include the secret Singapore-based fund Effissimo, which is the group’s largest shareholder and has put pressure on Nobuaki Kurumatani, the CEO who was hired in 2018 to turn the company around.
In the three years since his appointment, Kurumatani has repeatedly clashed with shareholders. At an extraordinary general meeting last month, Toshiba’s management suffered an embarrassing defeat after shareholders voted in favor of Effissimo’s proposal to investigate the company’s conduct during last year’s general meeting.
A bid from a non-Japanese private equity fund would require approval from the Japanese government, and a takeover of Toshiba would be particularly sensitive because it operates the country’s nuclear power plants.
However, CVC is no stranger to Toshiba. Kurumatani, a former banker, was president of the European arm’s Japanese arm before taking over as Toshiba’s CEO. Yoshiaki Fujimori, senior adviser to CVC in Japan, is also a member of the board of the Japanese group.
The agreement would be one of the largest leveraged buyouts since the financial crisis in 2008 on the same scale as Advent International and Cinven’s acquisition of Thyssenkrupp’s elevators within DKK 17.2 billion. Euro last year, according to Refinitiv.
CVC created a fund of 21 billion. Euro last year for offers in Europe and America and a separate Asian fund of 4.3 billion. USD according to its website.
But buying Toshiba would mark a departure from the company’s usual trading style in the region, where it typically buys groups valued at between $ 250 and $ 1.5 billion, its website said. In February, it acquired a majority stake in Shiseido’s personal care business.
CVC’s recent offer included a share of £ 365m. In the Six Nations rugby tournament and shares in two UK-based companies whose software is behind the rollout of the vaccine against the NHS coronavirus.
Several private equity firms have previously rejected a bid for Toshiba, calculating that if they broke the company, the sum of its shares could be greater than its current valuation, an industry adviser said. However, the adviser added that the size and complexity of the deal had previously made it difficult to draw.
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