Toshiba has been a household name in the electronics industry for more than a century. During that time, the company has been at the forefront of technological innovation, especially in the memory space, where Toshiba is one of the biggest players. Despite its success, Toshiba has faced challenges over the years.
Now, Toshiba's volatility has finally reached its apex: Toshiba, a major Japanese motor manufacturer, announced on the 23rd that it will accept a public offer (TOB) of shares from the Federation of Japanese Enterprises (JIP). Based on Toshiba's market capitalization, the proposal totals about 2 trillion yen (about 15 billion U.S. dollars). Toshiba is considering delisting from the Japanese stock market after the acquisition is completed. The acquisition is also expected to bring Toshiba's years of turmoil to an end.
Toshiba's long history of electronics innovation
Toshiba was first established in Japan in 1875, and since then it has proven to be a major contributor to the global technology community, particularly in the semiconductor memory market, with some of its most notable innovations including:
"World's first" 256 Gb, 48-layer BiCS Flash chip
3D NAND memory technology increases bit density in NAND flash
Toshiba has also made significant contributions outside the memory industry, including:
Power ICs for Automotive Safety
Silicon Multiplier for Automotive LiDAR
Tri-gate IGBTs enable faster switching and more efficient power electronics
While this list is not exhaustive, it demonstrates the breadth of Toshiba's reach across many fields and product categories.
A series of business downturns
Despite these technological successes, Toshiba has faced challenges over the years.
In 2006, after Toshiba acquired the Westinghouse Power Plant in the United States, it attempted to develop a world-standard nuclear reactor. The Fukushima nuclear accident in 2011 led to Toshiba's bankruptcy. Since then, Toshiba has faced multiple financial problems, including a massive accounting fraud in 2015 and subsidiary problems in 2020. During that time, Toshiba also sold its profitable computer memory chip business to a consortium led by Bain Capital for $18 billion. The sale is part of a broader restructuring effort to shore up the company's finances.
Toshiba announced in 2012 that the company would be split into three separate entities after a long period of management turmoil and negative net worth due to nuclear losses and shareholder conflict. The separation plan was unanimously approved by the board of directors.
"Active shareholders" put enormous pressure on Toshiba's management team
Active shareholderism refers to an investment strategy that maintains a certain amount of stock in the company or continues to increase purchases, and exerts shareholder rights to influence the company's decision-making and put pressure on the management. For Toshiba's management team, active shareholders The existence of has exerted a considerable degree of pressure on it.
At the beginning of 2020, Toshiba’s IT subsidiary had another abnormal transaction event. In the Toshiba shareholders’ meeting that year, one of the major shareholders, Effissimo Capital Management, nominated its corporate governance system and established a more favorable operating system. Fund founder Yoichi Kanai and three independent directors. The proposal was approved by nearly 43% of the shareholders who held a shareholding ratio but was rejected. Effissimo therefore asked Toshiba to set up a third-person committee to investigate the propriety of the shareholders' meeting. On the eve of the 2021 shareholders meeting, this investigation report was released, which pointed out that Toshiba and the Ministry of Economy, Trade and Industry have joined forces to put pressure on some shareholders in order to prevent the proposal of director candidates nominated by some shareholders from passing. As for the content of the report, the Ministry of Economy, Trade and Industry stated that it did not match the facts.
However, in order to ensure the status of investment from overseas funds, Japan’s Ministry of Economy, Trade and Industry has just amended the foreign exchange and foreign trade law not long ago to strictly regulate and monitor investment in Japanese companies from overseas funds.
Critics analyzed that because of the existence of the above-mentioned active shareholders, Toshiba hoped to gain more support and consulted with overseas fund CVC (CVC Capital Partners), and the Japanese legal representative of the fund, Masaki Kuratani, became Toshiba in 2018. CEO, and famous for selling Toshiba Memory (now KIOXIA) to Bain Fund. However, CVC hopes to take Toshiba off the market after acquiring it, which is different from the philosophy of the company's management group to maintain the listing, so the acquisition case funded by CVC has been interrupted. However, it has since returned to operating against the aforementioned active shareholders.
Toshiba is acquired
Last week, Toshiba made news in the semiconductor industry by announcing that its board had accepted a $15.2B takeover offer. Seeking help, Toshiba began the auction process about a year ago, in which it received eight initial acquisition proposals and two capital alliance proposals. Four bidders advanced to the second round, including private equity firms Bain Capital, CVC Capital Partners and Brookfield Asset Management. But in the end, after a year of this process, Toshiba's board accepted the JIP consortium's proposal.
The JIP consortium's bid was described as the "only complete proposal" submitted during the year-long competitive auction process. About 20 Japanese companies, including financial services firm Orix Corp, chipmaker Rohm Co and Chubu Electric Power, plan to participate in the deal.
For Toshiba, the deal bodes brighter for the future, where financial stability and increased resources can help the company return to its former glory. As for the semiconductor market, this acquisition can be seen as a positive, enabling the future survival of one of the memory leaders and ensuring that Toshiba can continue to innovate and contribute in the years to come.
Toshiba is a representative manufacturer of Japan and holds many important technologies in its hands. If the increase in management levels from overseas may lead to doubts about the outflow of Japanese technology. Therefore, Toshiba's dynamics are highly valued by the government and the economic circles.
Toshiba, which took more than three years to return from the Second Division of the Tokyo Stock Exchange to the First Division of the Tokyo Stock Exchange in 2021, is in the process of finding a balance between operating reconstruction, increasing profits, confrontation with shareholders, and continued cooperation.
