MBK Partners joins race to buy Toshiba

MBK Partners, largest private equity fund in Northeast Asia, has joined a race to take over Japan’s Toshiba Corp., which has so far drawn about 10 bidders including global PEFs and Japan Investment Corporation (JIC).

According to foreign media outlets and multiple sources from the investment banking industry on Thursday, MBK Partners recently submitted a letter of intent to Toshiba, joining 10 other major names including Kohlberg Kravis Roberts & Co. (KKR) and Bain Capital.

MBK Partners with $25.6 billion assets under management is known to be aggressively seeking the buyout by capitalizing its 10 years of investment experience in Japan.

Last year, MBK Partners sold Accordia Next Golf, the largest golf course chain operator in Japan, to Fortress Investment Group LLC under SoftBank Group, for $3.5 billion. It was the largest deal in the M&A industry of Korea, China, and Japan last year. MBK Partners managed to reap more than five times profit from the sale of Accordia Next Golf that it originally paid 800 billion won ($644.4 million) to own in 2017.

In 2021, MBK Partners invested a total $4 billion in 13 deals. MBK Partners is expected to join the bid in a consortium with overseas partners as it would need more than 10 trillion won in funds and also given Toshiba’s symbolic position in Japan’s economy.

With MBK in the race, competition to get Toshiba has further heat up despite the Japanese company’s massive financial trouble. Investors believe that the current problems at Toshiba have been mainly derived from its closed, conservative business practices while noticing great growth potential at the company.

Toshiba – founded in 1875 as a telegraph equipment manufacturer – has become a global electric and electronics giant running a wide range of businesses from nuclear, railway, chips, and home appliances after 1990s. The conglomerate, along with Nippon Steel and Toyota Motor, led Japan’s rapid economic growth in the 1990s.

Toshiba, however, generated huge losses due to nuclear business and accounting frauds in 2015 and struggled since then.

In 2017, Toshiba issued 600 billion yen ($4.6 billion) in new shares to prevent its delisting, which added activist funds as its shareholders. It also sold its cash cow memory chip unit to a Bain Capital-led consortium including SK hynix.

Currently, Toshiba is engaged in power facility, transportation system, elevator and air conditioning, and hard disk drive businesses. It still owns 40 percent of Kioxia, its former memory unit, which is an attraction point for bidders.

Last year, Toshiba raised 104.4 billion yen ($84.28 million) in operating income on sales of 3.05 trillion yen.

JIC, a Japan government-backed investment enterprise is actively seeking to buy out Toshiba in a consortium with an overseas private equity fund. JIC is a joint fund set up by the Japanese government and 25 private enterprises to nurture advanced industries.

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