Toshiba, a stalwart of Japan's corporate landscape with a rich history dating back to 1875, is set to bid farewell to the stock market, marking the end of a remarkable 74-year presence.
This monumental shift comes as a consortium led by private equity firm Japan Industrial Partners (JIP) has secured a controlling stake of 78.65% in the company, paving the way for a $14 billion deal to take the company private.
Toshiba's journey on the stock market began in May 1949, a pivotal moment in Japan's post-World War II recovery. Over the decades, the company diversified its interests, spanning home electronics to nuclear power stations, and played a significant role in shaping the country's technology industry. In 1985, Toshiba introduced the world's first mass-market laptop computer, further solidifying its reputation as an innovation powerhouse.
However, recent years have been marred by a series of setbacks and corporate governance issues, which culminated in the decision to go private. In 2015, Toshiba admitted to overstating profits by over $1 billion, leading to a historic fine. Subsequently, the company revealed substantial losses in its US nuclear power subsidiary, Westinghouse, necessitating a massive writedown. In a bid to avoid bankruptcy, Toshiba sold its coveted memory chip business in 2018.
Toshiba's plight attracted several takeover offers, including one from UK private equity group CVC Capital Partners in 2021, which was ultimately rejected. Moreover, the company faced allegations of collusion with the Japanese government to suppress the interests of foreign investors, further tarnishing its reputation.
The company's attempts at restructuring were met with challenges, including a proposed breakup into three separate businesses, later revised to two units. Amid this tumultuous period, Toshiba's board considered JIP's offer to take the company private, ultimately leading to the current decision.
"The company needs to radically reinvent itself after spinning off many of its core business units, notably its semiconductor group," emphasized Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation.
Toshiba's delisting also reflects a broader trend among Japanese firms choosing to go private to evade shareholder scrutiny. "Toshiba, in the eyes of many Japanese people and especially the government, is a national treasure, which is part of the problem," commented Gerhard Fasol, CEO of business advisory firm Eurotechnology Japan.
Toshiba's president and CEO, Taro Shimada, expressed optimism about the company's future under the new ownership, stating, "Toshiba will now take a major step toward a new future with a new shareholder."
As the curtains fall on its stock market history, Toshiba prepares for a new chapter, hoping to regain its former glory through reinvention and restructuring under private ownership.
