Toshiba Ends 74-Year Stock Market History in Private Equity Deal

Toshiba, a venerable Japanese corporation with a 74-year history on the stock market, is bidding farewell to public trading as a consortium led by private equity firm Japan Industrial Partners (JIP) secures a majority stake of 78.65%.

The purchase, announced by Toshiba, enables the group to proceed with a $14 billion (£11.4 billion) deal to take the company private, potentially delisting its shares by year-end.

Toshiba’s origins trace back to 1875, when it began as a manufacturer of telegraph equipment. Over time, it diversified into various sectors, from home electronics to nuclear power stations, symbolising Japan’s post-World War II economic resurgence and technological prowess. In 1985, Toshiba pioneered the “world’s first mass-market laptop computer.”

However, the Tokyo-based conglomerate has faced significant challenges in recent years. Corporate governance issues plagued the company’s leadership. In 2015, Toshiba admitted to overstating profits by over $1 billion for six years, resulting in a record 7.37 billion yen ($47 million; £38 million) fine in Japan.

Two years later, it disclosed substantial losses in its US nuclear power subsidiary, Westinghouse, leading to a 700 billion yen writedown. To avert bankruptcy, Toshiba sold its prized memory chip business in 2018.

The company subsequently received takeover offers, including one from UK private equity group CVC Capital Partners in 2021, which it rejected. In the same year, Toshiba was found to have colluded with the Japanese government to suppress foreign investors’ interests.

Amid these challenges, Toshiba initially planned to split the company into three units but later revised the plan, opting for a two-unit split. Prior to implementing the new breakup strategy, Toshiba’s board considered JIP’s proposal to privatise the company.

Toshiba’s shift towards private ownership reflects a need for reinvention after shedding key business segments. It also aligns with a broader trend among Japanese firms opting for privatisation to reduce shareholder accountability.

As Toshiba 74 year history embarks on this transformation, its President and CEO, Taro Shimada, expressed optimism about the company’s “new future with a new shareholder.” The consortium’s acquisition marks a pivotal moment in the history of a corporation that has been a stalwart of Japan’s industrial landscape.