Toshiba Agrees to Sale Following Activist Pressure

Toshiba has put itself up for sale, bowing to pressure from shareholders, including those who want to take the company private, The Wall Street Journal (WSJ) reported Thursday (April 21).

Last month, U.S. private-equity firm Bain Capital said it was examining a possible bid for the Japanese company, which has struggled in recent years following an accounting scandal in 2015 and the bankruptcy of its nuclear energy business in the U.S. two years later.

Read more: Bain Capital Considers Taking Toshiba Private

According to WSJ, the company plans to seek nonbinding proposals from bidders and wrap up an initial evaluation prior to its yearly annual shareholder meeting in June. From there, it will reveal the number of proposals and types of deals being offered by investors.

After the shareholder meeting, Toshiba said it will solicit binding offers and choose the best one.

“We are very cognizant of the company’s shareholder requests for clearer value comparisons of strategic alternatives,” Toshiba said, per the report.

The announcement of a pending sale is essentially an almost total concession by management to the activist investors, the report stated.

New CEO Taro Shimada, took over Toshiba last month. A purchase by a foreign investor like Bain would be one of the largest cross-border deals for a Japanese company, although challenges remain, such as the treatment of Toshiba businesses that have national security implications like its defense sector.

Earlier this year, Toshiba’s management tried — but failed — to rally support for a proposal to cut the business in half, with nearly 60% of shareholders voting against the idea. This faction was led by foreign shareholders who said the company should look to more far-reaching options, such as a sale to a private equity firm.

Shareholders based outside Japan now control around half the company after making capital investments in 2017 to restore Toshbia’s finances, according to the report.

The relationship between the company and these investors soured in June following a report that showed widespread collaboration between the Japanese government and the company to keep these shareholders from exercising their rights.