Thursday Dec 21 2023 13:12
4 min
After 74 years on the Tokyo exchange, Toshiba stock was delisted on Wednesday, marking the end of an era for one of Japan's major brands. The move follows a tumultuous decade marred by scandals, leading to the conglomerate's privatization in a $14 billion takeover by a consortium of investors led by private equity firm Japan Industrial Partners (JIP), alongside financial services firm Orix, utility Chubu Electric Power, and chipmaker Rohm.
Toshiba held a listing on the Tokyo Stock Exchange from 1949 to 2023, serving as a component of the Nikkei 225 and TOPIX 100 indices. Although it departed from both indices in August 2018, it later rejoined the TOPIX 100 in 2021.
The buyout, bringing Toshiba under domestic ownership, comes after prolonged clashes with foreign activist investors that had paralyzed the company, known for its production of batteries, chips, nuclear, and defense equipment. The last trading day saw Toshiba shares close at 4,590 yen, a marginal 0.1% dip from the previous day.
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While the exact trajectory of Toshiba under its new owners remains uncertain, Chief Executive Taro Shimada, retaining his position post-buyout, is anticipated to steer the company toward high-margin digital services. JIP's backing of Shimada led to a deviation from a previous plan to collaborate with a state-backed fund, with some industry insiders suggesting that a breakup of Toshiba might be a more viable option.
JIP has a history of successfully separating businesses from major manufacturers, a notable example being its involvement in the carve-out of Sony's laptop division and Olympus's camera unit.
Following the acquisition of the Sony Vaio laptop business in 2014, JIP played a key role in contributing to the company's record-breaking sales in the past year.
Damian Thong, head of Japan research at Macquarie Capital Securities, told Reuters:
"Toshiba's difficulties ultimately were caused by a combination of bad strategic decisions and bad luck. I hope that through divestitures, Toshiba's assets and human talent can find new homes where their full potential can be unleashed."
The Japanese government, closely monitoring the situation, recognizes Toshiba's significance for the country’s economy, as the firm employs close to 106,000 people, with certain operations deemed critical to national security. The board will see the inclusion of four JIP executives, along with representatives from investors Orix and Chubu Electric. A senior adviser from Toshiba's primary lender, Sumitomo Mitsui Financial Group, will join the new management team.
Toshiba is already on the move, having initiated a partnership with Rohm to invest $2.7 billion in manufacturing facilities for the joint production of power chips.
Toshiba "will now take a major step toward a new future with a new shareholder," the company said in a statement, adding that it would appreciate continuous understanding and support from its stakeholders.
Ulrike Schaede, a professor of Japanese business at the University of California, San Diego (UCSD), told the Reuters news agency that the company needs to get out of lower-margin businesses and develop stronger commercial strategies for some of its advanced technologies:
"If management can figure out a way to let those engineers truly engage in breakthrough innovation activities, they can emerge as an important player. They're a deep tech company."
Some of Toshiba’s competitors, such as South Korean electronics giant Samsung and U.S. computer firm Dell Inc., have seen their stock rise by 29.5% and 80% over the past year.
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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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