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Toshiba board supports – without recommending – $15 billion takeover bid

It's probably going to happen, but final approval depends on 'circumstances'

The board of troubled Japanese tech conglomerate Toshiba has announced it supports but will not recommend a $15 billion takeover offer that will launch in the next ten days but won't close for around four months.

A Thursday announcement [PDF] revealed that a subsidiary of Japan Industrial Partners, Inc. (JIP) will shortly issue a tender for all Toshiba shares, taking the company private.

The board also shared its "opinion supporting the Tender Offer if the Tender Offer is commenced and to refrain from making the decision on recommending shareholders to tender their shares in the Tender Offer at this time."

Which, apart from the convoluted corporate-speak, is rather odd. If a board supports a transaction, it's usually a sign it thinks it will be good for shareholders.

But because around four months will elapse between the issuance of the tender and the moment at which shareholders must make a decision about whether to accept it, Toshiba's board is reluctant to recommend the deal.

The reason offered for the coyness is "the possibility that new circumstances may arise during this period which may cause the Board of Directors to reconsider its opinion."

Macro-economic changes are the only circumstance mentioned in the documents as likely to influence the board's decision. And fair enough: the $15 billion buyout could be a lousy deal four months from now.

Indeed it was not a great deal just six months ago in October 2022, when Toshiba shares changed hands for ¥5,512 apiece. The JIP offer is to acquire Toshiba shares at ¥4,620 each – around ten percent higher than recent trades but a little below the six-month average.

Toshiba has endured a decade of strife thanks to an accounting scandal, a governance scandal,a (thankfully financial) meldtdown of its nuclear power business … and other troubles besides.

The board responded with a plan to split the giant into three smaller giants, but that was rejected. As was its sequel, which called for a two-way split.

As activist investors became involved, the conglomerate effectively put itself up for sale, and picked a consortium of Japanese businesses as its approved suitor.

Which brings us to Thursday's support for a transaction without a recommendation to vote for it, and at least four months left during which the deal – like so much else at Toshiba in recent years – could yet go pear-shaped. ®

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