TOKYO, Oct. 18 (BNA) Two sources said that the preferred bidder for Toshiba had offered to pay less than the widely recognized limit of 6,000 yen per share, indicating that the Japanese giant’s premium may not be as wealthy as investors. a wish.
A consortium led by private equity firm Japan Industrial Partners (JIP) was given preferred bidding status by Toshiba in a second round of bidding on Oct. 7, although the conglomerate remains open to bids from others, people familiar with the matter said, Reuters reported.
A separate source said the terms of the JIP proposal include retaining the current management, a friendly offer by Toshiba CEO Taro Shimada that aims to increase profits by boosting data-related services.
One of the sources said JIP, which has invited Japanese companies including Oryx Corp and Chubu Electric Power Co, Inc. to join the consortium, has been given a month to come up with a detailed proposal that includes funding.
The two sources told Reuters that JIP’s initial offer was less than 6,000 yen per share, estimating the value of the potential tender offer at less than 2.6 trillion yen ($17.5 billion).
Toshiba shares closed at 5,435 yen on Monday. They are up about 15% this year on the back of buyout expectations.
The sources, who asked not to be identified because the matter is private, said the bid price could change as a consortium led by the state-backed Japan Investment Corporation prepares for a competing bid.
Toshiba, JIB and JIC declined to comment.
JIP teamed with JIC to bid for Toshiba in the first bidding round but was later split due to disagreement over post-purchase strategies, people familiar with the matter said.
The sources said JIC is in talks with Bain Capital, one of several offshore funds that have passed the first round of bids, as well as with MBK Partners.
Investors considered 6000 yen as the main threshold.
During a strategy review last year, at least one global private equity firm told Toshiba’s audit committee that a takeover deal for the private conglomerate could take place at 6,000 yen per share or more.
But the environment for debt takeovers has since changed with the tightening of global monetary policy. Shares of the chip maker around the world have fallen due to fears of slumping demand for semiconductors, which could affect the value of Toshiba’s 40.6% stake in Kioxia Holdings Corp.
Private equity sources said the re-qualification of auto parts supplier Marelli Holdings Co Ltd in Japan has made banks cautious about terms for financing debt acquisitions.
However, with its very easy policy, they said, Japan has a relatively stable investment environment compared to the United States. Japan has seen some big acquisitions in recent months despite market headwinds this year, including Bain Capital’s $3.1 billion deal for Olympus Corp.’s microscope unit (7733.T).
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