Nikkei Asia reported today that CVC Capital Partners would propose a privatisation of Toshiba valuing the company at $20.8bn. CVC will discuss the terms of the deal with management and will also need to win approval from the Finance Ministry. The question is whether shareholders would accept such a bid as it looks perhaps a little light.
However, the company has pretty low ROE based on truly awful capital allocation policy. A very large portion of the long-term assets in the firm are effectively managed by people with little to no experience in the space, in a sub-optimal capital structure. The company has large amounts of net cash, and securities, and more securities and crossholdings. And the entire company is effectively a leasing business with some add-ons, and it finances itself with almost zero debt.
While it is dangerous to call a paradigm change on companies where there is a significant corporate cross-holding and significant family holding and control, there are times when the confluence of events make stocks like Wakita worth a deeper look.