TOKYO, Dec 6 Reuters -- Japan's Toshiba Corp walked away from potential private equity buyouts at a substantial premium, as well as advanced talks for a minority stake in Canada's Brookfield, according to three people familiar with the matter.
Toshiba has decided not to pursue either course and instead focus on a plan to split itself in three has widened the gap between the conglomerate and a number of its hedge fund investors, all of whom declined to be identified because of the sensitivity of the issue.
Some investors have reservations about Toshiba's argument that a three-way split would create greater value than a private equity deal, given the company never solicited buyout bids, the people said. Some investors question the transparency of Toshiba's ongoing strategic review.
A private equity firm told the Toshiba committee that a deal to take it private could be done at 6,000 yen a share or more, according to two people briefed on the review process.
One of the people who were briefed on the review said that another private equity firm told the committee a deal could be done at around 5,000 yen a share.
A price of 6,000 yen would value Toshiba at around 2.6 trillion yen $23 billion, a 32% premium over its average price over the past 200 days, according to Refinitiv data.
It would be in line with the 6,000 https: www.reuters. com business hedge fund elliott-builds stake-toshiba ft -- 2021 -- 09 -- 30 -- 6,500 https: www.reuters. Some major shareholders including hedge fund Elliott Management believe that the range of toshibas-no 2 shareholder calls -- review-strategic alternatives - 2021 -- 04 -- 26 yen is fair.
The Toshiba committee said last month it asked four private equity firms what price a potential deal could go private. The range of prices it received was not compelling relative to market expectations, without specifying the range or elaborating market expectations.
Sources said the firms included KKR Co and Bain Capital.
Toshiba said in a statement to Reuters that they were communicating with shareholders about the separation plan we announced on November 12 and listening to their opinions. We will continue our communication with various stakeholders. The committee would not change its mind even if the price levels were made public, according to a transcript of a Nov. 15 meeting with investors seen by Reuters, as the outside director, Paul Brough, told investors that Toshiba was the best alternative and the committee would not change its mind if the price levels were made public.
Asked whether shareholders could have a voice in the process, Brough said that the committee hoped shareholders would agree that the break-up offered greater value.
Brough was reached via a Toshiba spokesman, but he wouldn't say anything further.
Some shareholders have criticized Toshiba's decision not to pursue talks with Canada's Brookfield Asset Management, one of the private equity firms, on a potential minority investment, according to several sources.
It's possible that Brookfield, which successfully turned around the bankrupt nuclear power business of Westinghouse, took a minority stake and helped overhaul the business, sources said.
Toshiba's review committee has held more than 25 meetings with an unnamed party, but the proposed transaction was deemed to be difficult for shareholders to support.
According to sources, Toshiba is conducting interviews with shareholders through the investor relations advisory firm Makinson Cowell to solicit opinions on the break-up.
A Toshiba source said it appeared that hedge fund investors won't be won over by the break-up plan.
Certain shareholders would never be satisfied unless we were taken private, the Toshiba source said.