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$15bn Scramble for Japan’s Toshiba Went From Bang to Whimper

The $15 billion bid, led by domestic buyout firm Japan Industrial Partners (JIP) and accepted by Toshiba’s board last week, could finally end years of exhausting battles with activist shareholders that sparked management reshuffles and strategy reversals.

Less certain is whether the deal can revive the 147-year-old conglomerate, which has never fully recovered from a 2015 accounting scandal and the bankruptcy of US unit Westinghouse two years later.

Major activist shareholders are expected to exit, people familiar with the matter said. Some, including top shareholder Effissimo Capital Management, could make huge profits, having bought their shares cheaply in a 2017 bailout.

Other investors may not be so lucky: the offer price represents a 15% discount from December 2014, before the accounting scandal. It also represents a 22% discount to the lifetime high hit in June last year.

Many of the 23 companies investing alongside JIP have ties to Toshiba. Some were introduced to JIP by Toshiba’s management, some of the people said, declining to be identified because the information is not public.

Some others were introduced by the trade ministry, one person said.

The investors include longtime business partners such as Chubu Electric Power. “Toshiba has been a very important business partner,” said a person at one of the companies.

Toshiba’s management, including CEO Taro Shimada, will stay on, while the government keeps Toshiba’s sensitive defence and nuclear technologies in Japanese hands.

“It has been a complete mess,” said analyst Mio Kato of LightStream Research, which publishes on Smartkarma.

The process involved “too many stakeholders making strong demands of management in ways that conflicted with each other,” he said.

Activists also “grossly underestimated” the difficulty and time required to fix Toshiba, he said.

Major shareholders have declined to comment, as has the trade ministry.

Toshiba’s board, which includes representatives from Paul Singer’s Elliott Management and Farallon Capital Management, formally accepted JIP’s offer of 4,620 yen a share, Toshiba said in a statement on Thursday, valuing it at 2 trillion yen ($15.2 billion).

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