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Toshiba may conclude 74-year stock market run

  1. Toshiba’s Long History Comes to an End
  2. Majority Stake Acquisition by Japan Industrial Partners (JIP)
  3. Toshiba’s Challenges and Shift Toward Privatization

Toshiba, one of Japan’s oldest and largest companies, will terminate its 74-year stock market history as a result of a majority stake purchase by investors.

A consortium led by the private equity firm Japan Industrial Partners (JIP) has acquired 78.65 percent of the company’s shares, according to an announcement made by the company.

The group’s ownership of more than two-thirds of the company enables it to conclude a $14 billion (£11.4 billion) deal to take it private.

The company began making telegraph equipment in 1875.

Under the terms of the agreement, its stock could be removed from the market as early as the end of this year.

The company “will now take a major step towards a new future with a new shareholder,” according to a statement from Toshiba’s president and CEO, Taro Shimada.

Toshiba may conclude 74-year stock market run
Toshiba may conclude 74-year stock market run

In May 1949, when the Tokyo Stock Exchange reopened as Japan emerged from the devastation of World War II (WW2), Toshiba shares began trading.

Its divisions vary from consumer electronics to nuclear power plants, and for decades after World War II, it was a symbol of the nation’s economic recovery and technological advancement.

In 1985, Toshiba introduced the “world’s first mass-market laptop computer,” according to the company.

In recent years, the Tokyo-based company has experienced several significant setbacks.

Toshiba’s debacle is a result of inadequate corporate governance at the top,” said Gerhard Fasol, CEO of business advisory firm Eurotechnology Japan.

In 2015, it admitted to overstating its profits by more than $1 billion over six years and paid the largest fine in the country’s history at the time: 7.37 billion yen ($47 million; £38 million).

Two years later, it disclosed significant losses at its US nuclear power division, Westinghouse, resulting in a 700 billion yen write-down.

In 2018, the company sold its memory chip division, the crown jewel of its portfolio, to avoid bankruptcy.

Since then, Toshiba has received multiple takeover offers, including one in 2021 from the British private equity firm CVC Capital Partners, which it rejected.

The company was found to have conspired with the Japanese government to suppress the interests of foreign investors in the same year.

Mr. Fasol stated, “In the eyes of many Japanese citizens and the government in particular, Toshiba is a national treasure, which is part of the problem.”

The company then announced its intention to split into three separate enterprises. The board changed the idea months later to split the firm into two.

Before implementing the revised separation plan, the board considered JIP’s privatisation proposal.

Marc Einstein, chief analyst at Tokyo-based research and advisory firm ITR Corporation, remarked, “The company must radically reinvent itself after spinning off many of its core business units, notably its semiconductor group.”

He added that Toshiba was the most recognizable company to join the trend of Japanese companies going private to evade “being accountable” to shareholders.

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