For nearly seven years, the saga of Toshiba hasunfolded with each new twist more extraordinary and damaging for the reputation of one ofcorporate Japan’s most famous names. The first stumble for Toshiba wasa profit-padding scandal that laid bare a soured internal corporate culture.Then came the collapse of its US nuclear business, a glimpse into the abyss of bankruptcy and painfulquestions about the quality of the company’s dealmaking history and business strategy. Next was the controversial $18bn sale of Toshiba’s memory chip business. Now renamed as Kioxia, it was bought by a consortium led by Bain Capital and remainsJapan’s biggest ever private equity deal. A huge issuance of new shares in anemergency capital-raising exercise.
Loaded Toshiba’s shareholder register with feistyhedge funds and activists – more so than for any other major Japanese corporation.This has come back to bite Toshiba again and again, particularly after the companywas forced by its investors to probe its own relationship with the government, and allegedattempts to influence key AGM votes. There has never been much calm, but whateverstability there was vanished entirely in 2021: Toshiba had received interest from privateequity in a deal to take the whole company off the market and repair its manyproblems as a private company. That ultimately forced the then chief executiveout, it set investors at odds with Toshiba management once again and led to the establishmentof a strategic review committee.
The conclusion of the committee, delivered lastNovember, was to split Toshiba into three parts, but many investors hated the idea, andthe plan was swiftly abandoned. Finally, in April, Toshiba announcedit was setting up a special committee to assess potential bids from private equityand other investors, opening the door for a landmark deal to take one of the country’sbiggest industrial names private. The saga continues, but the story has alreadygenerated an unprecedented amount of attention on the way that large Japanese companiesaddress long-standing obstacles to change.