Toshiba stock rises after company's largest shareholder backs Bain buyout deal

According to persons familiar with the matter, the US venture capital group is likely to be in a space to offer a formal bid to Toshiba "very soon," and has found signals of acceptance from inside the industry's upper ranks.

For the past year, Toshiba stockholders have been speculating about a takeover bid that would be Japan's largest-ever and a major milestone for privatized equity's entry into the world's third-largest financial system. Some have contended that the corporation is worth far more than $20 billion.

The decision by Toshiba's controlling stake, Effissimo Investment Company, to endorse Bain puts enormous strain on the Japanese corporation to actively pursue takeover offers from private equity-directed consortiums and find a solution to an exceedingly tumultuous relationship with stockholders.


The Singapore-based fund Effissimo claimed in a government statement on Thursday that it has offered to transfer around nine per cent of its investment in Toshiba if Bain presented a bid that received regulatory approval.

Toshiba's businesses include nuclear power, security, and electronics, in addition to its standing as a symbol of Japanese industrial might (following Friday's gain, Toshiba's market capitalization is $17.3 billion).

Considering the constrictions of Japan's newly updated exchange rates and international commerce regulations, investment bankers say a full takeover of Toshiba by an all-foreign consortium is unlikely.

The arrangement between Bain and Effissimo blocks them from giving away its stock to other prospective buyers, posing significant issues for KKR, Blackstone, and other equity companies showing a keen interest in getting Toshiba.