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Private equity firms eyeing Toshiba buyout face nuclear dilemma


It’s the multibillion dollar conundrum facing private equity firms trying to snap up Toshiba Corp.: What to do about the troubled conglomerate’s sensitive nuclear power business?

Toshiba, which had originally opposed a buyout, now plans to solicit proposals from potential investors in a drastic change in stance. The nuclear unit, which is deemed important to Japan’s national security, could be the biggest obstacle to any deal.

As PE giants including Bain Capital, CVC Capital Partners and KKR & Co. consider bids for the company, one of their biggest challenges will be devising a plan that wins government approval. According to experts, they have no easy choices.

“If a foreign fund were to buy Toshiba, it would be subject to examination by the government under the Foreign Exchange and Foreign Trade Control Law,” said Mitsuhito Taki, a lawyer specializing in corporate legal affairs at Yanagida & Partners in Tokyo. “It would be difficult to allow a foreign fund to acquire the company given Toshiba’s current business profile.”

Representatives for CVC and KKR declined to comment. Bain didn’t comment.

Toshiba’s nuclear business is involved in decommissioning the wrecked Fukushima No. 1 nuclear power plant, making it hard for the government to accept a transfer of ownership to an overseas firm. The company also retrofits existing nuclear plants across the country to meet post-Fukushima safety standards and resume operations.

………….  another option would be to sell the nuclear unit, either before or shortly after a PE deal. However, finding a buyer wouldn’t be easy, according to Ryuzo Yamamoto, a professor emeritus specializing in energy policy at Tokoha University in Shizuoka prefecture.

Toshiba’s nuclear technology has fallen behind trends outside Japan, Yamamoto said. The firm lags behind overseas rivals in developing small and advanced modular reactors. And Toshiba’s boiling water reactors aren’t being considered for use in future projects………..


May 3, 2022 - Posted by | Uncategorized

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