British private equity firm CVC Capital Partners has proposed a buyout of Toshiba Corp. to take it private in a deal likely worth around 2 trillion yen ($18 billion), the Japanese firm's president said Wednesday.
The investment firm will discuss terms with the management of the Japanese electronics and infrastructure conglomerate and engage in talks with the Japanese government about screening of the proposed acquisition, sources familiar with the matter said.
"It is true we received a proposal and we will discuss that at our board meeting," Toshiba President Nobuaki Kurumatani told reporters. Prior to taking the helm of Toshiba, Kurumatani served as chairman of CVC's Japanese unit.
Toshiba has faced pressure from activist shareholders who invested in the conglomerate when it was struggling to get back on its feet, and taking the Japanese firm private could speed up management's decision-making, the sources said.
Established in 1981, CVC has $117.8 billion worth of assets under its management, according to its website. In February, Japanese cosmetics maker Shiseido Co. said it would sell its personal care products business, known for brands such as Tsubaki, to CVC for 160 billion yen.
Based on Tuesday's closing stock price, Toshiba is capitalized at 1.74 trillion yen. A buyer typically pays a premium in a tender offer, potentially pushing the value of a full acquisition of Toshiba shares above 2 trillion yen.
The purchase of Toshiba, which has a nuclear power business, would need to be screened and approved by the Japanese government under the country's law regulating foreign investment in companies due to national security reasons.
Toshiba said in a statement that it received an initial proposal on Tuesday, adding that it will ask for more details and examine it "carefully."
Last month, Toshiba held an extraordinary meeting at the request of foreign activist investors. A proposal by Singapore-based Effissimo Capital Management Pte. Ltd. was approved, a rare victory for shareholder activism in corporate Japan.
The fund called for a fresh investigation into whether Toshiba's general shareholder meeting last year was held fairly since shareholder services provider Sumitomo Mitsui Trust Bank mistakenly omitted some mailed-in votes.
In recent years, Toshiba has undergone sweeping restructuring after an accounting scandal in 2015, followed by the bankruptcy of its U.S. nuclear plant subsidiary in 2017.
It has exited from unprofitable TV, personal computer and U.S. nuclear power businesses while selling its chip-making subsidiary to a consortium led by U.S. private equity fund Bain Capital in 2018.
Toshiba's businesses include infrastructure, energy and semiconductors. It is now shifting its focus more to renewable energy.
In January, Toshiba returned to the First Section of the Tokyo Stock Exchange, more than three years after it was demoted to the Second Section as the conglomerate's financial health deteriorated due to huge losses incurred at the U.S. nuclear unit Westinghouse Electric Co.
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