Toshiba In CVC Private Equity Buyout?
Updated April 9, 2021: Toshiba’s board on April 9 cautioning the CVC proposal is preliminary and may not lead to a transaction, Bloomberg reports.
“Toshiba received an initial proposal [April 5, 2021], and will ask for further clarification and give it careful consideration,” Toshiba told Reuters amid the go-private rumors. CVC declined to comment about the report.
If CVC acquires Toshiba, the deal would be one of the largest leveraged buyouts in history, according to Dealogic, and possibly the largest in Asia, rivaling the 2018 deal led by Bain Capital to acquire Toshiba’s flash-memory unit, The Wall Street Journal reports.
In a leveraged buyout, a financial company such as CVC uses borrowed money to buy a business, typically hoping to improve its operations and sell at a profit later, The Journal adds.
Toshiba and CVC: About Each Business
Toshiba is a multinational conglomerate headquartered in Minato, Tokyo. The company, founded in 1939, focuses on such markets as consumer electronics; building control systems; appliances; medical equipment; chips; and power systems, among other areas of expertise.
CVC, meanwhile, has extensive experience in the IT services, software and technology markets. The private equity firm’s investments include
- Network services provider ConvergeOne;
- Mobile app distribution and monetization specialist ironSource;
- cybersecurity management software provider Skybox Security; and
- compliance software developer VelocityEHS.
ChannelE2E has not independently confirmed the alleged CVC-Toshiba discussions.
Toshiba Accounting Scandals, Business Exits
Accounting scandals have rocked Toshiba multiple times in recent years. The first Toshiba accounting scandal — involving inflated operating profits — surfaced in 2015. A second Toshiba accounting scandal surfaced in 2020; this time, it involved the Toshiba-IT Services booking fictitious sales between November 2015 and July 2019, The Japan Times reported.
Amid the financial challenges, Toshiba sold a controlling stake in its flash-memory unit, while retaining a minority stake, and it has shed medical, consumer-electronics and appliance businesses to focus on industrial areas such as energy and infrastructure, The Journal notes.
Moreover, Toshiba sold off some of its telecom and unified communications assets in 2017, and shut down its overall Telecommunication System Division that same year.
Toshiba Satellite Laptops: Acquired, Relaunched By Sharp Dynabrook
Toshiba also sold its PC business to Sharp, which renamed the division Dynabook. In January 2021, Dynabook re-launched the famed Satellite Pro laptop series and announced a distribution relationship with Synnex.
Blog originally posted April 7. Updated April 9 with Toshiba board statement.