Toshiba, a Japanese Icon, Prepares to Close 74-Year Chapter on Stock Market

21 Sep, 2023

Toshiba, a Japanese Icon, Prepares to Close 74-Year Chapter on Stock Market

Toshiba, one of Japan's oldest and largest corporations, is on the verge of concluding its 74-year history on the stock market as a consortium of investors, led by private equity firm Japan Industrial Partners (JIP), has successfully acquired a controlling 78.65% stake in the company. This majority ownership enables the group to finalize a $14 billion deal to delist Toshiba from public trading.

Toshiba's origins can be traced back to 1875 when it initially specialized in crafting clocks and mechanical dolls. The culmination of this acquisition could lead to Toshiba's shares being removed from the stock market as soon as the year's end. Commenting on this development, Taro Shimada, Toshiba's president and CEO, expressed, "The company will now take a major step toward a new future with a new shareholder."

Toshiba's shares first entered the stock market in May 1949, marking a pivotal moment as Japan was emerging from the aftermath of World War II. The company boasts a diverse range of divisions, spanning from consumer electronics to nuclear power facilities. For decades, it stood as an emblem of Japan's economic resurgence and technological prowess. Notably, Toshiba introduced what it dubbed "the world's first mass-market laptop computer" in 1985.

Nonetheless, in recent years, the Tokyo-based conglomerate faced significant setbacks. According to Gerhard Fasol, CEO of business advisory firm Eurotechnology Japan, "Toshiba's catastrophe is a consequence of inadequate corporate governance at the top." In 2015, the company admitted to inflating its profits by over $1 billion over a six-year period and incurred a hefty 7.37 billion yen ($47 million) fine, at that time the largest in Japan's history.

Subsequently, in 2017, it revealed substantial losses within its U.S. nuclear power subsidiary, Westinghouse, resulting in a massive 700 billion yen writedown. To avert bankruptcy, Toshiba sold its highly prized memory chip business in 2018.

Since then, Toshiba has been the target of several takeover bids, including one from UK private equity group CVC Capital Partners in 2021, which it rejected. In the same year, the company faced allegations of colluding with the Japanese government to undermine the interests of foreign investors.

Mr. Fasol noted, "Toshiba, in the eyes of many Japanese people and especially the government, is a national treasure, which is part of the problem." Subsequently, the company announced plans to divide itself into three distinct entities. However, the board later revised this strategy, opting instead to split the company into two units.

Before the implementation of the new breakup plan, Toshiba's board disclosed its consideration of JIP's proposal to privatize the company.