Toshiba shares jump on report of possible $19 billion stock purchase

TOKYO (Reuters) – Shares in Toshiba Corp (6502.T) It rose on Thursday after a report that a group led by local investors was looking into a $19 billion bid — a potential deal that could lead to the purchase of foreign activist shareholders after years of jitters.

A consortium led by private equity firm Japan Industrial Partners which also includes Chubu Electric Power Co (9502.T) Kyodo News and other media reported that it had been awarded Preferred Bidder status in the second round of bidding.

The 2.8 trillion yen figure cited by Kyodo would represent a 26% premium to Wednesday’s closing price.

Shares were up 7% in afternoon trading, on track for their biggest one-day gain in more than a year. It’s up about 17% this year.

Toshiba was once a multi-storey conglomerate that has been weakened by accounting and governance scandals. Attempts to change themselves in recent years have been overshadowed by a rift between management and several activist shareholders.

The consortium will put up about 1 trillion yen in equity, with the rest of the money likely to come from bank loans, Kyodo said, adding that funding talks are ongoing and the value of the offering may change depending on future movements of Toshiba’s share price.

Toshiba declined to comment on the report.

said Travis Lundy, an analyst at Quiddity Advisors who posts on the Smart Karma platform.

The two sources said the two had previously joined hands to bid for Toshiba, but then went their separate ways. Local media reported that the JIC has since been in talks with private equity firm Bain Capital, one of several offshore funds that have passed the first round of bids.

Toshiba and activist shareholders have been at odds over the company’s direction, with several large foreign funds pushing the group to consider private equity offerings.

Tensions came to a head last year when a shareholder investigation concluded that management colluded with Japan’s Ministry of Commerce — which views the company’s nuclear and defense technology as a strategic asset — to prevent foreign investors from gaining leverage at the 2020 shareholders’ meeting.

“The only way to get rid of the activists is to buy them,” Lundy said.

(dollar = 146.8300 yen)

Sam Byford reports. Editing by David Dolan and Edwina Gibbs

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