Toshiba shrinks its shortlist of suitors but warns a deal won't happen soon

Bain and Japan Industrial Partners among those in the running

Toshiba announced on Tuesday it has settled on a shortlist of potential buyers, with local reports suggesting its list of suitors includes Bain, Japan Industrial Partners, Brookfield Asset Management and CVC Capital Partners.

"After a comprehensive review of those proposals including a thorough engagement with potential partners, the board of directors today selected multiple potential partners to be invited to the second bid process," announced [PDF] Toshiba in a Wednesday statement.

The scandal-plagued Japanese giant said some proposals it considered wish to pursue privatization, while others advocate the company remain listed and establish strategic capital and business alliances.

While Toshiba did not detail how many of the ten proposals it has received remain in play, it said the ones it will continue considering succeeded due to offer price, the enhancement of corporate value in the medium to long term, financing arrangements, and the likelihood the transaction would satisfy Japan's national security and competition laws.

Regulatory scrutiny is expected to be significant, as Toshiba retains some business in nuclear power – a segment subject to Japan's Foreign Exchange and Foreign Trade Act.

Toshiba has asked those still bidding for the company to submit legally binding proposals alongside a detailed explanation of suitors' current business, legal, financial and tax situations. Deadlines for submission were not detailed, nor were timelines on how long such a deep dive into the businesses would take.

Nor has Toshiba divulged which companies made the shortlist

But according to Nikkei Asia, Japan Industrial Partners, Bain Capital, Brookfield Asset Management and CVC Capital Partners are among the investors who are proceeding to second round bidding. KKR allegedly did not submit a bid and Blackstone was not chosen to proceed.

Not all is lost for the rejected companies – entities could still partner with a successful applicant and secure their slice of Toshiba.

Toshiba announced in April it would consider offers to take the company private after its investor groups became fed up with ongoing scandals. The company had tried other strategies, like breaking itself into three entities, or two entities, but investors were not having it. Some even issued scathing open letters accusing Toshiba's board of lacking transparency and credibility.

But for now, it seems everyone is on the same page – especially now that the company has appointed two directors from activist hedge funds to its board to tip the balance in favor of a sale directed towards private ownership.

And in its statement on Tuesday, Toshiba said the options under evaluation were being evaluated for "the transformation of the company." ®