By Andy Slawetsky – Toshiba, a Japanese conglomerate, has agreed to a $15 billion buyout bid from a group led by private equity firm Japan Industrial Partners. It is important to note that Toshiba and Toshiba Tec (TTEC), the manufacturer of office equipment, barcode and label solutions, and more, are different companies. While Toshiba has been embroiled in controversy in recent years, the buyout bid is expected to be beneficial for the conglomerate in the long run.
The acquisition will be financed by investments from approximately 20 Japanese companies, including Orix, Rohm, and Chubu Electric Power, as well as loans from Japanese banks. The plan is to boost Toshiba’s value by having it collaborate with the investing companies. The buyout bid was accepted by Toshiba’s board of directors, which includes internal Toshiba directors and outside directors, after discussions by a special committee composed of outside directors. The company appears to have decided that an acquisition by JIP would enhance its corporate value and shareholder returns.
The move is expected to take the company private and put it firmly in domestic hands after much tension with overseas activist shareholders. With Toshiba held by a single company, decision-making is expected to be more straightforward, which should result in more efficient operations and greater profitability. The buyout bid will end months of uncertainty regarding whether a deal was coming and years of uncertainty regarding the board’s understanding of the right price.
While it is not yet clear whether activist funds, which are estimated to own roughly a quarter of the company, will be satisfied with the terms, the buyout bid is expected to be beneficial for Toshiba Tec.
Toshiba America Business Solutions (TABS) President and CEO Larry White viewed this as a positive for TTEC, parent company of TABS. “It’s very good news for Toshiba,” he told IA, Inc. this morning.
As a major investor of Toshiba Tec, the buyout bid should bring more stability to Toshiba, resulting in a positive impact on Toshiba Tec’s operations. In the end, the buyout bid could mark a turning point for Toshiba, putting it on a path towards greater success and profitability.
SOURCE Industry Analysts Inc,