Toshiba restructuring bid round 2: Japanese investment group JIP selected as preferred bidder

According to Japanese media reports, Toshiba has awarded preferred bidder status to an investment group led by Japan Industrial Partners (JIP), and negotiations are expected to focus on the purchase price and acquisition funding.

Tokyo-based private equity firm JIP is seeking to acquire Toshiba in partnership with Japanese companies including Orix and Chubu Electric Power.

The main focus of the negotiations may come down to the evaluation of the acquisition of Toshiba and the price. Toshiba has a market capitalization of about 2.2 trillion yen ($15 billion). Given the added premium to market value, the JIP-led group is expected to require a bid of around 2.5 trillion yen. It remains to be seen whether JIP and Toshiba can agree on terms within the expected one-month negotiation period.

Toshiba said on September 30 that as the bidding for Toshiba's restructuring proposal entered the second round, it has received a number of in-depth "letters of intent" from multiple investment groups.

Among other groups in the second round of bids is one involving Japanese investment firms - a state-backed fund - which is seeking to partner with Bain Capital to bid for Toshiba.

Because of Toshiba's forays into nuclear power, which Japan has designated as a "core" strategic business unit under its Foreign Exchange and Foreign Trade Act, any acquisition would be subject to intense government scrutiny. While overseas funds tend to have deep pockets, they cannot acquire Toshiba on their own without partnering with their Japanese counterparts. Toshiba and JIP are also expected to discuss how a potential acquisition could clear regulatory hurdles.