Toshiba shares jump on report of possible $19 bln buyout

TOKYO, Oct 13 (Reuters) – Shares of Toshiba Corp (6502.T) rose on Thursday on a report that a domestic investor-led group is targeting a $19 billion bid – a potential deal which would likely result in foreign activists buying out shareholders after years of tension.

A consortium led by private equity firm Japan Industrial Partners, which includes Chubu Electric Power Co (9502.T), has been awarded preferred bidder status in the second round of bidding, Kyodo news agency and other media reported.

Kyodo’s figure of 2.8 trillion yen would mark a 26% premium to Wednesday’s close.

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Shares rose 7% in afternoon trade and were on track for their biggest one-day gain in more than a year. They’re up about 17% this year.

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Once a storied conglomerate, Toshiba has been weakened by accounting and governance scandals. Attempts to turn around have been overshadowed in recent years by discord between management and its many activist shareholders.

The consortium will raise around 1 trillion yen of equity, with the rest of the money likely to come from bank loans, Kyodo said, adding that financing talks are ongoing and the offer value could change depending on future movements in Toshiba’s share price.

Toshiba declined to comment on the report.

It wasn’t immediately clear how many bids Toshiba is seriously considering, but competition to acquire the company is likely still an open race between Japan Industrial Partners and the state-backed Japan Investment Corp, said Travis Lundy, an analyst at Quiddity Advisors published on the Smartkarma platform.

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The two previously teamed up to bid for Toshiba but have since gone their separate ways, sources say. Japan Investment Corp has since been in talks with private equity firm Bain Capital, one of several foreign funds that passed the first round of tenders, local media reported.

Toshiba and activist shareholders have been at odds over the company’s direction, with several large overseas funds urging the conglomerate to consider private equity offerings.

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Tensions culminated last year when a shareholder-commissioned investigation revealed that management had worked with Japan’s Commerce Ministry – which views the company’s nuclear and defense technology as a strategic asset – to block foreign investors from attending its shareholders’ meeting Gaining influence in 2020.

“The only way to get rid of the activists is to buy them out,” Lundy said.

($1 = 146.8300 yen)

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reporting by Sam Byford; Editing by David Dolan and Edwina Gibbs

Our standards: The Thomson Reuters Trust Principles.


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