Toshiba's top shareholder would sell stake if Bain launches tender offer

[TOKYO] Toshiba's top shareholder has agreed to sell its stake to Bain Capital if the US private equity firm launches a tender offer, Effissimo Capital Management said in a regulatory filing on Thursday (Mar 31).

The agreement with Singapore-based Effissimo, which owns about 9.9 per cent of Toshiba, could potentially force Toshiba to revive talks for a private equity buyout after shareholders last week voted down the Japanese industrial conglomerate's plan to split its devices unit.

Effissimo said in the filing it had signed a confirmation letter dated Mar 24 that it would tender to a bid that allows Bain to own at least 2/3 of Toshiba and that clears regulatory approval.

The Nikkei business daily reported later on Thursday that Bain is planning to team up with Japanese investment funds in making a buyout offer.

Bain said in a statement nothing had been decided about a takeover bid for Toshiba, adding there were many issues that needed to be resolved to launch a bid to take Toshiba private.

"We believe we need to have careful and sincere dialogues with Toshiba management, the Japanese government, financial institutions and other stakeholders," it said.

Three sources with knowledge of the matter have told Reuters that other global private equity firms are also interested in taking Toshiba private.

One of them sounded out Toshiba management about a potential buyout in January, saying that it could make a proposal if the company is interested, said the sources, who declined to be identified as the talks were private.

Toshiba said in a statement it was not involved in the confirmation letter between Effissimo and Bain, as well as in its contents.

It also said the company accepts the opinion of the shareholders expressed at last week's meeting and will aim to build trust with shareholders and reconsider its strategic options to enhance value.

A spokesperson for Effissimo, when asked about the filing, said the fund planned to announce its stance at the appropriate time.

Reuters reported last year that Bain was looking at formulating a bid to take Toshiba private, making it one of several companies said to be interested in such a deal.

During a five-month strategic review through November, Toshiba held discussions with private equity firms but decided not to entertain potential offers. Sources said the private equity firms Toshiba held talks with included Bain, KKR & Co Inc and Blackstone.

Bain owns Kioxia Holdings, the world's second-largest maker of NAND flash memory chips. Toshiba has a 40 per cent stake in the chipmaker. REUTERS