TOKYO, December 6 – Japanese firm Toshiba Corp has pulled out of potential private equity buyout offers at a substantial premium, as well as advanced talks for a minority stake in Canadian Brookfield, according to three people familiar with the matter.
Toshiba’s decision not to go either route – details of which have yet to be reported – and instead focus on a plan to split into three, has widened the wedge between the conglomerate and a number of its hedge fund investors, according to the people. , all of whom declined to be identified due to the sensitivity of the matter.
Some investors dispute Toshiba’s argument that a three-way split would create more value than a private equity deal, given that the company has never formally solicited takeover bids, the people said. As such, some investors question the transparency of Toshiba’s ongoing strategic review.
At least one private equity firm has told Toshiba’s strategic review committee that a deal to make it private could be reached at 6,000 yen per share or more, according to two people briefed on the review process.
Another private equity firm told the committee that a deal could be done at around 5,000 yen per share, according to one of those briefed on the review and another person.
A price of 6,000 yen would value Toshiba at around 2.6 trillion yen (RM97 billion) and represent a 32% premium over its average price over the past 200 days, according to data from Refinitiv.
It would also be in line with the 6,000 yen range that some major shareholders, including hedge fund Elliott Management, felt was right.
The Toshiba committee said last month it asked four private equity firms what price a possible privatization deal could be made. The price range it received was “not convincing relative to market expectations,” he said in a statement, without specifying the range or giving details of market expectations.
Several sources said the companies included KKR & Co and Bain Capital.
“We are communicating with shareholders to explain to them the separation plan that we announced on November 12 and to listen to their opinions,” Toshiba said in a statement to Reuters. âWe will continue to communicate with various stakeholders. “
The outside director who heads the committee, Paul Brough, told investors that the Toshiba split was “the best alternative”, and that the committee would not change its mind even if the price points were made public, according to a transcript of a November 15 meeting with investors as seen by Reuters.
Asked by an investor whether shareholders could “have a voice in the process,” Brough said the committee hoped shareholders would agree the breakup offered greater value.
Reached via a Toshiba spokesperson, Brough confirmed his comments in the transcript but declined to comment further.
Some shareholders have also challenged Toshiba’s decision not to continue discussions with Canadian Brookfield Asset Management, one of the private equity firms, over a possible minority investment, according to several sources.
It could have seen Brookfield, which was successful in turning around the bankrupt nuclear power business of the Westinghouse conglomerate, taking a minority stake and helping with the company’s overhaul, sources said.
Brookfield did not immediately respond to a request for comment.
Toshiba’s review committee said it had held more than 25 meetings with an anonymous “party”, but the suggested transaction was ultimately viewed as “difficult” for shareholders to support.
Toshiba is currently holding talks with shareholders through investor relations consultancy Makinson Cowell to solicit opinions on the split, sources said.
A source from Toshiba, who declined to be identified, said it appeared some hedge fund investors would never be convinced by the break-up plan.
âSome shareholders would never be satisfied unless we agreed to be private,â the Toshiba source said. – Reuters