TMI Associates and Nishimura in Toshiba take-private deal


Japanese law firm TMI Associates has advised a group led by private equity firm Japan Industrial Partners to acquire Toshiba for JPY2 trillion (USD15.2 billion) in a take-private deal.

TMI Associates was the main counsel and retained Davis Polk & Wardwell as counsel on North and South American aspects, while Slaughter & May managed Europe, the Middle East and Africa matters.

Nishimura & Asahi advised Toshiba with Tokyo-based partner Hiroshi Uchima leading the team, while Toshiba’s board and its special counsel were assisted by Nagashima Ohno & Tsunematsu and Morrison Foerster.

Masakazu Iwakura

Masakazu Iwakura, a partner at TMI Associates in Tokyo who led the team in the deal, told Asia Business Law Journal that some of Toshiba’s major activist investors sent their representatives to the company’s board of Toshiba.

This resulted in the team negotiating the buyout agreement with not only the executives (including the president, deputy-presidents, etc.) but also the activist investors, Iwakura said.

“The negotiation was complicated in formalities and took a very long time, and as Toshiba is a gigantic company, the due diligence review was very broad and took very tedious procedures,” said Iwakura.

“Furthermore, as Toshiba deals with and owns so-called sensitive or very important technologies, such as nuclear-related and quantum computer-related technologies, it was quite critical to make thorough checks on foreign jurisdictions’ FDI control regime (i.e., national security regulations) in the relevant countries, with more than 50 jurisdictions, in addition to the merger control regulations.”

Toshiba’s board in March voted in favour of the tender offer, marking a milestone in the company’s turnaround efforts and hoping that a single owner will improve decision-making at the company. Toshiba has gone through ups and downs since the company first received a buyout offer from private equity firm CVC Capital Partners in April 2021.

The 12-member board accepted Japan Industrial Partners’ proposal, concluding that the offer would enhance Toshiba’s corporate value. The consortium will proceed with antitrust and other regulatory reviews in countries including the US, the UK and Germany.

After the acquisition, Japan Industrial Partners and 17 Japanese companies, as well as six domestic financial institutions and foreign investors, will hold stakes in the entity.

Iwakura said Toshiba’s loss in its investment in US nuclear engineering group, Westinghouse Electric Company, has become a precedent for Japanese companies to be more sensitive to the importance of reviewing due diligence of the foreign target and its quality.

Toshiba bought Westinghouse in 2006 for more than USD5 billion and the nuclear company went bankrupt in 2017. Westinghouse was sold by Toshiba to Canadian asset manager Brookfield in a USD4.6 billion deal.

“Toshiba said that it entrusted the due diligence to its advisers without reasonable control, and therefore Japanese companies now recognise that it is very critical for them and its main counsel to control the due diligence review and to deeply analyse the process and the result,” said Iwakura.