Toshiba, a Japanese Icon, Bids Farewell to 74 Years on the Stock Market

Introduction:

Toshiba, a well-known and long-established Japanese company, is on the brink of a major shift in its history, spanning an impressive 74 years on the stock market. This historic change is happening because a group of investors, led by Japan Industrial Partners (JIP), has acquired a controlling stake in the company.

 

Toshiba has officially confirmed that this consortium, backed by JIP, now holds 78.65% of its shares. Having ownership of more than two-thirds of the company's shares allows this group to complete a substantial $14 billion deal to take Toshiba private.

 

Toshiba's origins date back to 1875 when it started as a manufacturer of telegraph equipment. Over the years, it expanded its business interests, covering everything from home electronics to nuclear power plants. For many decades after World War II, Toshiba symbolized Japan's remarkable economic recovery and its prominence in the technology sector.

 

Toshiba's shares were first traded on the Tokyo Stock Exchange in May 1949, marking a significant moment as Japan emerged from the aftermath of World War II.

 

Under this new ownership, there's a possibility that Toshiba's shares may stop being publicly traded by the end of this year. Toshiba's President and CEO, Taro Shimada, is hopeful and sees this as a significant step toward a new future with its new majority shareholder.

 

However, Toshiba has encountered its fair share of challenges in recent years. It grappled with corporate governance issues and faced a notable scandal in 2015 when it admitted to inflating its profits by over $1 billion over a six-year period. This admission resulted in a record-setting fine of 7.37 billion yen, which was the largest in Japan's history at that time.

 

In 2017, Toshiba disclosed substantial losses in its US nuclear power subsidiary, Westinghouse, leading to a 700 billion yen writedown. To avoid bankruptcy, Toshiba had to sell its highly valuable memory chip business in 2018.

 

Throughout the years, Toshiba received multiple takeover offers, including one from the UK private equity group CVC Capital Partners in 2021, which the company declined. Additionally, Toshiba faced controversy for colluding with the Japanese government to limit the influence of foreign investors.

 

The decision to go private reflects Toshiba's need for a significant transformation, particularly after selling off many core business units, notably its semiconductor division. It also aligns with a growing trend among Japanese companies to go private, reducing their accountability to shareholders, as highlighted by Marc Einstein, Chief Analyst at the Tokyo-based research and advisory firm ITR Corporation.