“End of an Era: Toshiba, a Japanese Corporate Icon, Nears 74-Year Stock Market Exit”.
Toshiba, one of Japan’s most venerable and largest companies, is on the cusp of ending its remarkable 74-year journey on the stock market, following the acquisition of a majority stake by a consortium of investors.
Announcing the momentous development, Toshiba revealed that a group led by private equity firm Japan Industrial Partners (JIP) has secured a 78.65% ownership stake in the company. This majority ownership enables the consortium to proceed with a substantial $14 billion (£11.4 billion) deal to privatize Toshiba.
Toshiba’s origins trace back to 1875 when it specialized in crafting clocks and mechanical dolls. As part of the current agreement, there is a possibility that its shares could be delisted from the stock market by the close of this year.
Taro Shimada, President and CEO of Toshiba, remarked, “The company will now take a major step toward a new future with a new shareholder.”
Toshiba’s stock first entered the market in May 1949, marking a significant moment as Japan emerged from the aftermath of World War Two (WW2). The company’s diverse operations have spanned from consumer electronics to nuclear power plants, symbolizing Japan’s post-WW2 economic revival and technological prowess for decades. However, in recent years, the Tokyo-based conglomerate has encountered numerous substantial challenges.
According to Gerhard Fasol, CEO of business advisory firm Eurotechnology Japan, “Toshiba’s catastrophe is a consequence of inadequate corporate governance at the top.”
In 2015, Toshiba admitted to inflating its profits by over $1 billion over a six-year period, resulting in a record 7.37 billion yen ($47 million; £38 million) fine, the largest in Japan’s history at that time. Two years later, it disclosed significant losses in its U.S. nuclear power subsidiary, Westinghouse, leading to a massive 700 billion yen writedown.
To avoid insolvency, Toshiba divested its memory chip business in 2018, a prized asset in its portfolio. Subsequently, the company received several acquisition offers, including one from UK private equity firm CVC Capital Partners in 2021, which it declined. In the same year, Toshiba was implicated in collaborating with the Japanese government to suppress the interests of foreign investors.
Mr. Fasol pointed out, “Toshiba, in the eyes of many Japanese people and especially the government, is a national treasure, which is part of the problem.”
Following these developments, Toshiba initially proposed dividing the company into three separate entities, later revising the plan to create two units. Prior to the implementation of the revised breakup plan, the company’s board began considering JIP’s proposal to take the company private.