Toshiba Set to Delist After 74 Years, Embracing New Ownership
Updated: Dec 22, 2023
Toshiba, the renowned Japanese conglomerate, is preparing to be delisted from the Tokyo exchange after a remarkable 74-year run.
This move comes after a tumultuous decade filled with scandals and upheaval that ultimately led to the downfall of one of Japan's most prominent brands.
As Toshiba faces an uncertain future, it is set to be taken private by a group of investors led by Japan Industrial Partners (JIP), a private equity firm. Other key players in this buyout include financial services firm Orix, utility company Chubu Electric Power and chipmaker Rohm.
The takeover, valued at a staggering $14 billion, marks a significant shift for Toshiba as it transitions into the hands of domestic investors. This move comes after prolonged battles with overseas activist investors that had paralysed the company's operations in various sectors, including batteries, chips and nuclear and defense equipment.
While the exact direction Toshiba will take under its new ownership remains unclear, Chief Executive Taro Shimada, who will continue in his role following the buyout, is expected to prioritise high-margin digital services. This strategic focus aims to steer Toshiba towards a more profitable future.
JIP's support for Shimada had derailed the company's earlier plan to collaborate with a state-backed fund. Some industry insiders believe that splitting up Toshiba may be a more viable option. Damian Thong, head of Japan research at Macquarie Capital Securities, commented on the challenges faced by Toshiba, stating, "Toshiba's difficulties ultimately were caused by a combination of bad strategic decisions and bad luck. I hope that through divestitures, Toshiba's assets and human talent can find new homes where their full potential can be unleashed."
The Japanese government will closely monitor the situation, as Toshiba employs approximately 106,000 people and some of its operations are deemed critical to national security. As part of the transition, four JIP executives will join the board, along with representatives from Orix, Chubu Electric and Sumitomo Mitsui Financial Group, Toshiba's main lender.
Toshiba has wasted no time in making moves under its new ownership. The company has already partnered with investor Rohm to invest $2.7 billion in manufacturing facilities for joint production of power chips. This strategic investment aims to position Toshiba in higher-margin businesses and strengthen its commercial strategies for advanced technologies.
Ulrike Schaede, a professor of Japanese business at the University of California, San Diego, emphasised the importance of Toshiba's engineers in driving breakthrough innovation. She stated, "If management can figure out a way to let those engineers truly engage in breakthrough innovation activities, they can emerge as an important player. They're a deep tech company."
As Toshiba embarks on this new chapter, the world watches with anticipation to see how the company will navigate its future under the guidance of its new owners. The delisting marks the end of an era for Toshiba, but it also presents an opportunity for the conglomerate to redefine itself and emerge as a stronger player in the digital services landscape.
Toshiba, after 74 years on the Tokyo exchange, is set to be delisted and taken private by a group of investors led by Japan Industrial Partners (JIP).
The $14 billion takeover puts Toshiba in the hands of domestic investors and follows battles with overseas activist investors.
Chief Executive Taro Shimada will focus on high-margin digital services under the new ownership.
Source: REUTERS