Toshiba shares trading paused after $20bn takeover bid from British fund

Toshiba is contemplating a $20bn (£14.6bn) buyout deal from a British private equity fund, CVC Capital Partners, Nikkei Asia reported on Tuesday. Soon after news of the buyout deal spread, the Tokyo Stock Exchange temporarily halted the trading of Toshiba’s shares.

Nobuaki Kurumatani, CEO and president of the Japanese firm, confirmed the report and told reporters that an “offer has come”. He said the company would discuss the deal with its board members at a meeting that was scheduled for later in the day.

CVC Capital Partners joins other private equity funds, including KKR, in what may become a bidding battle and Japan’s biggest ever buyout deal.

Nikkei Asia reported that CVC is considering a “30 per cent premium over the Japanese industrial group’s undisturbed share price”, which brings the value of the offer to $20.8bn. CVC will also consider other investors to seal the acquisition.

Toshiba’s share price rose on Wednesday as soon as the news of the offer was published. Trading of its shares was halted on the Tokyo Stock Exchange before Toshiba issued its statement.

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The statement said that Toshiba would ask CVC for further clarifications on the offer and “give it careful consideration”. Trading resumed soon afterwards.

A meeting will take place between CVC and Toshiba’s management team to discuss the terms of the buyout. Nikkei Asia reported that Toshiba’s management would consider the buyout’s benefit to its shareholders before taking any call on the CVC offer.

In recent years, Toshiba has been embroiled in an accounting scandal and the loss of billions of dollars over a US nuclear subsidiary. Experts told the media that this buyout offer by CVC could bring that chapter to an end for the Japanese giant.

In 2006, CVC was involved in the management buyout of Skylark, a Japanese restaurant chain operator. With offices in 23 countries and assets worth $117.8bn, the British fund also recently acquired Shiseido, a Japanese multi-national personal care company.

Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co, told Bloomberg: “The shareholders may be receptive given that the deal appears to offer a premium. But the government will also need to give its approval because of Toshiba’s involvement in defence. There are still a lot of questions around whether this kind of deal is achievable at all.”