Toshiba’s Impending Takeover

After years of scandals and mismanagement, Toshiba may soon be acquired in an M&A deal.

Buyout giants Bain, Blackstone, KKR and CVC are understood to be among at least 10 bidders circling Japanese multinational Toshiba at the time of writing. If a deal happens, it could be a pivotal moment for not only Japan’s M&A landscape but also its future competitiveness. 

After years of scandals and mismanagement, Toshiba, which has businesses spanning everything from electronics to heavy industries, has been under pressure from activist shareholders. The biggest is Singapore-based Effissimo Capital Management, a nearly 10% shareholder, which has called for bids from outside buyers.

CVC made a $20 billion buyout bid that was rejected last year. This time, KKR and Blackstone are also reported to be planning a joint bid. Meanwhile, Effissimo has said it would sell its stake to Bain if it made a tender offer. Toshiba sold its memory-chip unit to a Bain-led consortium in 2018.

“It would be a watershed moment,” says Jochen Ellrott, an M&A lawyer with Freshfields Bruckhaus Deringer in Tokyo. “Private equity has been very active and successful in Japan for many years now and is a key driving force behind the recent M&A boom in Japan. But, given Toshiba’s size and diverse portfolio, the complexity involved in taking Toshiba private would be unprecedented.”

If a deal is reached, it would still have to get merger clearance and foreign investment control approval, which could prove a major task. Toshiba operates in many sensitive areas, such as nuclear power, semiconductors and defense.

The company has also been at the forefront of many advances in quantum computing, with intellectual property important to Japanese competitiveness. Ulrike Schaede, a professor of Japanese business at the UC San Diego School of Global Policy and Strategy, says the deal puts the government between “a rock and a hard place.”

“It’s a really important moment in time, and I think it will be significant whether it goes through or not,” she says. “If it goes through, Japan has lost not only one of its biggest brands, but also one of its biggest bets in digital transformation technology.”