Toshiba Corp. said Thursday it decided to recommend its shareholders sell their holdings in a 2 trillion yen ($14.3 billion) tender offer by a consortium led by Japan Industrial Partners Inc., a major step toward the planned privatization of the struggling tech giant.
The conglomerate voted at a board meeting in favor of the buyout offer in March but then stopped short of recommending share sales at the offer price of 4,620 yen a share, which the company saw as low.
The offer price by the consortium that includes Tokyo-based JIP, Orix Corp., and Rohm Co. is only 1.8 percent premium to the company’s closing stock price Thursday on the Tokyo stock market of 4,540 yen.
Akihiro Watanabe, Toshiba’s board chairman, said at a press conference that the worsening business environment for its 40 percent-held chip affiliate Kioxia Holdings Corp. and a lack of any other rival offer are behind the decision.
“We continue to be faced with an uncertain macroeconomic environment,” Watanabe said. “Under such circumstances, we thought JIP is unlikely to raise their offer price.”
The company is in the midst of restructuring efforts, struggling to recover from a spate of problems over the past decade, including an accounting scandal and massive losses in its U.S. nuclear business.
The fund group plans to launch the tender offer next month, valuing Toshiba at about 2 trillion yen, in a bid to go private and turn around the scandal-stricken conglomerate.
Kioxia fell into the red in the last fiscal year that ended in March, posting a net loss of 138.1 billion yen, as chip demand for smartphones and PCs dropped.
The chipmaker and its U.S. peer Western Digital Corp. are in talks for a merger, a move that could create a new memory chip company with a global share on par with the leading rival in the industry, people familiar with the matter said last week.
“Kioxia is an importance piece” for the buyout scheme, Watanabe said. “But we think there will probably be no drastic change” in its value around the time the tender offer starts in July, he said.
Toshiba President Taro Shimada said at the press conference that full support for the buyout plan will also ensure all stakeholders, including customers and employees, benefit from the company’s restructuring.
“We have received positive response from various stakeholders” since the decision was made to back the plan in March, Shimada said. “We renewed our awareness of the importance of building a stable management base.”