Bain Capital plots to buy Toshiba with help from largest shareholder

The deal is a long way from done and players can already foresee rival bids

Updated Singapore-based Effissimo Capital Management, the largest shareholder in troubled Japanese tech giant Toshiba, has signed a deal to sell its stake to American private investment firm Bain Capital – if Bain decides to launch a takeover bid.

As explained in a regulatory filing Effissimo submitted on Thursday, the deal does not bind the investment firm or Bain if a better offer, or rival buyer, comes along.

Effissimo vigorously opposed Toshiba's plan to split itself into two companies earlier this month. That plan and a previous strategy to split into three companies were Toshiba's attempts to put years of scandal and underperformance behind it.

As those scandals unfurled, Effissimo was allegedly pressured – and even threatened – by Toshiba and Japan's government to vote its shares in ways that would minimize the influence of activist foreign investors.

Rumors have swirled that Bain Capital would look to buy Toshiba. Japanese outlet Nikkei Asia yesterday reported that Bain was working with other Japanese corporations and investors to acquire Toshiba and take it private.

Reuters reported that Bain had already "sounded out" other shareholders. Bain reportedly said there were "issues that needed to be resolved to launch a bid to take Toshiba private."

Bain already owns almost 56 per cent of Toshiba's former memory business, Kioxia Holdings, having purchased it in 2018.

But a Bain Capital acquisition of Toshiba could come under government scrutiny thanks to Japan's Foreign Exchange and Foreign Trade Act. In 2020, revisions to the law made life harder for foreign investors operating in Japan.

Toshiba has issued a statement proclaiming it had no knowledge of the Bain/Effissimo deal, and remains committed to devising a new strategy for shareholders to consider – but without a timeframe or any hint of that new plan. ®

Updated to add on April 1, 2022

Bain Capital said in a statement (translated from the Japanese) that "at this time, we have not made any decision regarding the tender offer for the common stock of Toshiba Corporation."

It added: "We recognize that there are many issues that need to be resolved toward the consideration and implementation of the tender offer... We believe that it is necessary to hold dialogues with other stakeholders carefully and sincerely.

"We will continue to do our utmost to support the potential competitiveness and maximization of the potential of Japanese companies."

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