Toshiba is at crossroads, again

Article By : Majeed Ahmad

Toshiba is at crossroads once more, and this time due to friction between two bidding partners for a potential buyout of the Japanese conglomerate selling from semiconductor chips to nuclear equipment. According to aReutersreport, private equity firm Japan Industrial Partners (JIP) plans to retain Toshiba’s CEO Taro Shimada and his management team, which has caused friction with its bidding partner in the first round, the state-backed fund Japan Investment Corp. (JIC).

In June this year, Shimada told theWall Street Journalthat he wants to keep Toshiba in one piece while striving to overhaul the 147-year-old company. On the other hand, JIC, 96% owned by the Japanese government, isn’t very keen to spend taxpayer money on a deal just to take a company private and make things easier for the current Toshiba management.

According to JIC sources, any investment must fulfill policy goals such as promoting restructuring. Besides the concerns that the current management could impede the kind of sweeping reorganization necessary to put it on the road to recovery, there are other issues as well. For example, what will be the impact of the slumping semiconductor demand on Toshiba’s 40.6% stake in flash memory chipmaker Kioxia?

Source:Toshiba

So, after teaming up in the first round of bidding earlier this year, JIP and JIC have parted ways for the second round. As a result, JIP looked set to miss the Monday, 7 November deadline to deliver a firm proposal. Meanwhile, JIP has invited several domestic companies to join its consortium, including financial services firm Orix and utility company Chubu Electric Power.

It’s worth mentioning that JIP has previously bought out Olympus’ camera business and Sony’s laptop business. Now, despite missing the deadline, the firm is likely to continue trying to secure equity and financing commitments after the deadline.

Toshiba, once a Japanese manufacturing giant, has lurched from one crisis to another since an accounting scandal rocked the company in 2015. And that has been exacerbated by years of discord between management and major shareholders. Now the fate of Toshiba and its 116,000 employees hangs in the balance once more, calling for astute financial engineering to preserve Toshiba’s legacy and turn it into a twenty-first-century tech entity.

This article was originally published onEDN.

Majeed Ahmad, Editor-in-Chief of EDN and Planet Analog, has covered the electronics design industry for more than two decades.