After 74 years on the Tokyo exchange, Toshiba (6502.T) will be delisted on Wednesday. This comes after a decade of turmoil and controversy that overtook one of Japan’s largest brands, signaled a takeover, and left the company’s future unclear.
Japan Industrial Partners (JIP), a private equity firm, is leading a group of investors in taking the conglomerate private. Other investors in the deal include financial services company Orix (8591.T), utility Chubu Electric Power (9502.T), and semiconductor manufacturer Rohm (6963.T).
After lengthy conflicts with foreign activist investors that paralyzed batteries, electronics, nuclear, and defense equipment manufacturers, Toshiba is now in local hands thanks to a $14 billion purchase.
Toshiba’s eventual form under its new owners is uncertain. However, Taro Shimada, the company’s chief executive, who will remain in his position after the takeover, is anticipated to concentrate on high-margin digital services.
Its support for Shimada had derailed JIP’s previous proposal to work with a state-backed fund. Industry sources suggest that Toshiba could be better off being divided up. According to Damian Thong, head of Japan research at Macquarie Capital Securities, “a combination of bad strategic decisions and bad luck ultimately caused Toshiba’s difficulties.”
“I hope that through divestitures, Toshiba’s assets and human talent can find new homes where their full potential can be unleashed.”
The government of Japan will be closely monitoring this. About 106,000 people work for the corporation, and certain of its operations are vital to the country’s security.
Along with one representative from each of the investors, Chubu Electric (9502.T) and Orix (8591.T), four JIP executives will be on the board. A senior adviser from Sumitomo Mitsui Financial Group (8316.T), Toshiba’s primary lender, will join the new management team.
To jointly develop power chips, Toshiba has already started to move forward, partnering with investor Rohm (6963.T) to invest $2.7 billion in production facilities.
Ulrike Schaede, a Japanese management professor at the University of California, San Diego, stated that the corporation has to establish a better marketing strategy for some of its innovative products and move out of the lower-margin sector.
“If management can figure out a way to let those engineers truly engage in breakthrough innovation activities, they can emerge as an important player,” Schaede stated. “They’re a deep tech company.”
