Japanese Fund Lures Local Companies In Planned Buyout Of Toshiba

A Japanese investment fund seeking to buy out Toshiba Corp. is asking a group of Japanese companies to join hands to clear the second round of bidding for the troubled conglomerate, people close to the matter said, Mainichi Japan reported.

Photo Insert: Toshiba's market capitalization is around 2.2 trillion yen ($15 billion).

By teaming up with domestic companies, the Tokyo-based fund, Japan Industrial Partners, could gain an advantage over other bidders, including US investment fund Bain Capital, in clearing government screening of offers for Toshiba, which is deemed crucial to Japan's national security because of its nuclear power and defense businesses.

Companies contacted by the fund include financial services firm Orix Corp., the sources said. Chubu Electric Power Co., a major power company serving central Japan areas, is considering investing in a Toshiba buyout scheme, a company official said Sunday without revealing whether it has been approached by the fund, Kyodo News also reported.

The fund has teamed up with Japan Investment Corp., owned in large part by the Japanese government, to move past the first round of bidding after Toshiba began accepting strategic options earlier this year, including a buyout and going private, following its shareholders' rejection of a two-way split plan.

In addition to Bain Capital, two other bidders are expected to offer follow-up proposals, according to other sources familiar with the process. Japan Industrial Partners is proposing to take Toshiba private, the sources said.

Toshiba's market capitalization is around 2.2 trillion yen ($15 billion). The company's plight began with an accounting scandal in 2015, followed by the 2017 bankruptcy of its US nuclear plant subsidiary Westinghouse Electric Co.

A series of management woes have further tarnished its corporate image. In 2021, Toshiba executives were found to have colluded with the Ministry of Economy, Trade and Industry to prevent foreign activist shareholders from influencing the board by sending in directors, leading its shareholders to vote out some of the board members at the time.

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