Asia's biggest buyout: Toshiba valued at $16 billion by JIP in takeover bid

A consortium led by Japan Industrial Partners Inc. is considering a takeover of Toshiba Corp. at a valuation of about 2.4 trillion yen ($16.1 billion) in what could be Asia’s biggest buyout this year, according to people familiar with the matter.

The JIP-led group, which is the preferred bidder to take the Japanese industrial group private, plans to provide 1 trillion yen in cash, while seeking financing totaling 1.4 trillion yen from banks along with a committed line of credit of 200 billion yen in working capital, said the people, who asked not to be identified as the matter is private.

Toshiba, in its regular meeting with banks including Sumitomo Mitsui Banking Corp. on Oct. 20, informed them that JIP is valuating the company at around 2.4 trillion yen and asked them to give financing support, the people said.

Shares of Toshiba fell as much as 1.3% on Tuesday in Tokyo, giving the conglomerate a market value of about $15.6 billion. A bid at 2.4 trillion yen would be worth about 5,541 yen per share according to Bloomberg calculations, similar to Toshiba’s closing price of 5,391 per share on Monday. 

JIP has yet to finalize the equity commitments from its partners, while banks remain cautious about making binding commitments, the people said. Both the consortium led by JIP and a rival group led by state-backed investment fund Japan Investment Corp. will find it hard to meet a Nov. 7 deadline to line up commitment letters, Bloomberg News reported earlier. 

Considerations are still ongoing and there’s no certainty that talks will lead to any transaction, the people said. Toshiba could still decide to explore certain asset sales instead of a full sale of the business, they said.

Spokespeople for JIP and SMBC declined to comment. A Toshiba spokesperson said in response to a Bloomberg News query that, as a general rule, they cannot answer information about candidates, including co-investors, as it may undermine a fair process.

JIP is in talks to form a partnership with domestic companies including Orix Corp. and Chubu Electric Power Co. as well as global investment firms such as Baring Private Equity Asia and CVC Capital Partners, Bloomberg News has reported. That coalition has made a proposal that would keep Toshiba’s current business structure intact. 

Investors including Bain Capital and MBK Partners have discussed being involved in JIC’s rival bid group, people familiar with the matter have said.