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CVC Capital Partners has taken a big step back his plans to deprive Toshiba in Japan’s largest leverage purchase in a letter telling the company it would “set it aside” for now.
The letter follows a dramatic one-week sequence of events that began on April 7 with the leaking of the $ 20 billion offer proposed by CVC and culminated in the abrupt resignation of Toshiba chief executive Nobuaki Kurumatani.
The original CVC plans provided for a central role for Kurumatani, who had previously worked as head of CVC in Japan.
The CVC letter, which was viewed by the Financial Times, said: “Our offer was and continues to be dependent on the full support of your board and management team. CVC does not intend to initiate a tender without first obtaining the consent of your board of directors.
He added: “Our understanding. . . is that for now you plan to give priority to communication with shareholders. Therefore, we respectfully wait for your guidance on whether a privatization of Toshiba will suit the strategic objectives of the management and the board of directors. ”
Shares of Toshiba fell more than 4% on Wednesday in early operations in Tokyo.
In a statement on Tuesday, Toshiba reiterated that it was still “impossible” to assess the European private equity group’s offer.
“This letter did not contain specific and detailed information capable of making a detailed assessment,” the company said. “He simply stated that CVC would walk away to wait for our guidance.”
CVC was not immediately available for comment.
This month’s preliminary CVC proposal had raised the prospect of a bidding war, as KKR and other private equity groups began considering rival bids that could exceed CVC 5,000 ($ 46) as a bid. of action.
But the departure of Kurumatani, who was introduced to Toshiba in 2018 to manage a change in investment, eliminates a business leader with close government relations that would have been vital to navigating the purchase of such a sensitive company.
Toshiba is unique among Japanese groups for several reasons. It has a nuclear and defense business, but at the same time some of its major shareholders are activist funds that have asked the company to take any external approach seriously.
“I don’t think anything in the CVC letter or in the company’s public reaction to it rules out the possibility that private equity will play a potentially important role in Toshiba’s future. I’m sure it will still be they are forming plans, ”said one person who has worked closely with Japan’s major private equity groups.
While pointing out several obstacles to depriving the company, Toshiba said it would “seriously consider and evaluate any credible offer” and that the board would appoint financial and legal advisers to make the process transparent.
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