Toshiba Corporation is a leading Japanese maker of personal computers, consumer electronics, home appliances, and medical equipment. Subsequently aims to have 150 years of expertise within the business by 2025.
Toshiba was delisted from the Tokyo Stock Exchange on Wednesday after 74 years, following a decade of turmoil and controversy that took down one of Japan’s largest companies and ushered in a takeover and an uncertain future.
Toshiba’s shares ended at 4,590 yen on Tuesday, down 0.1% from the previous day. The difficulties that hampered Toshiba’s business
Accounting Scandal:
In 2015, Toshiba disclosed accounting malpractices across multiple divisions, which involved top management. In total, it overstated its pretax profit by 230 billion yen ($2 billion) over seven years.
The company reports revealed that the company’s top executives were forced to overstate profits over several years. Company managers insisted on setting unrealistic performance targets for the firm’s new businesses, such as smart meters and electronic toll booths, after the global financial crisis seven years ago.
Toshiba’s US subsidiary filed for bankruptcy:
A Toshiba Corporation subsidiary Westinghouse Electric Company, a nuclear energy company, was acquired by Toshiba in 2006 for $ 5.4 billion.
Toshiba was developing four reactors in the United States Southeast, as well as Toshiba was planning to develop dozens of more AP 1000 reactors in the United States for nuclear electricity in the future.
But projects soared due to increased safety demands by U.S. regulators, and also due to significantly higher-than-anticipated costs for labor, equipment, and components.
That caused several billions of dollars of cost overruns under-construction nuclear reactors in the United States caused the parent company to report a net loss of 1 trillion yen ($9 billion) in the fiscal year 2017.
Sold-off Chip Unit Business:
Toshiba’s organisation faced over $9.8 billion in liabilities as a result of the massive loss in a nuclear energy company, resulting in Toshiba choosing to sell the chip unit to a consortium led by Bain Capital for $18 billion to get out of the issue.
However, the transaction landed the corporation in a protracted legal battle with chip joint venture partner Western Digital Corp (WDC.O) over the sale, as well as antitrust scrutiny.
Inflow of Foreign Investor Funds:
Toshiba received a $5.4 billion financial injection from more than 30 offshore investors in 2017, which not only helped it escape delisting but also drew in renowned activist shareholders such as Elliott Management, Third Point, and Farallon. It resolves the disagreement with Western Digital.
In response to activist investor pressure, Toshiba appointed four non-Japanese directors to its board in 2019. But In 2020, Toshiba discovered new accounting issues at a completely owned subsidiary.
Allegation Against Investors:
Toshiba revealed in 2020 that more than 1,000 postal voting forms for their AGM went uncounted. Sumitomo Mitsui Trust Bank, the bank that counts the ballots, eventually disclosed widespread failure to tally all legitimate votes at AGMs of its client corporations during the previous two decades.
As a result, corporate shareholders demanded an independent inquiry into claims that investors were pressured ahead of the previous year’s AGM.
The term “delisting” was coined.
In 2021, CVC Capital Partners made an unsolicited $21 billion offer to take Toshiba Corporation private. In the meantime, CEO Kurumatani resigned amid controversy over the CVC bid, perceived by some within company management as designed to shield him from activist shareholders.
Japanese Government Interference
In 2021, a company shareholder-commissioned inquiry revealed that Toshiba cooperated with Japan’s commerce ministry – which regards Toshiba as a strategic
asset owing to its nuclear reactor and defence expertise – to prevent outside investors from acquiring influence at the 2020 shareholders meeting. Toshiba, on the other hand, divided itself into three companies: one for energy, one for infrastructure, and one to handle its Kioxia shareholding.
The End of a Stock Market Legacy
Based on those prolonged battles and strategies with overseas activist investors, Toshiba’s diverse portfolio, encompassing batteries, chips, and nuclear and defence equipment, is under the control of the domestic hand.
According to Reuters, the conglomerate received funds from private ownership through a $14 billion takeover led by a consortium of investors that included private equity firm Japan Industrial Partners (JIP), financial services firm Orix, utility Chubu Electric Power, and chipmaker Rohm.
In December 2023, Toshiba ended its 74-year history as a listed company.
Written by Omkar Chitnis
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