The Japanese Toshiba studies a purchase offer of 20,000 million dollars -source

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Toshiba (T: 6502 ) Corp is considering a $20 billion takeover bid from venture capital firm CVC Capital Partners, a person familiar with the matter said, at a time when that the Japanese industrial conglomerate faces pressure from activist shareholders to improve its governance.

The proposal — which comes three weeks after shareholders approved an independent investigation into the scandal-tainted company — could shield managers, chief executive Nobuaki Kurumatani in particular, from such scrutiny. However, the operation would entail a review by regulatory bodies due to its activity for public bodies.

“Toshiba received an initial proposal yesterday and will seek further clarification and carefully consider it,” Toshiba said in a statement, without elaborating.

Toshiba’s board of directors, which includes Kurumatani, who joined Toshiba from CVC, and Yoshiaki Fujimori, an adviser to the private equity firm, will discuss the proposal on Wednesday, the person with knowledge of the proposal said.

Toshiba shares weren’t trading in morning trading, with buy orders outstripping sell orders.

CVC is considering a 30% premium to Toshiba’s current share price in a takeover bid, putting the value of the deal at nearly 2.3 trillion yen ($21 billion) based on Tuesday’s stock closing price of 3,830 yen, said the source, who declined to be identified because the matter was confidential.

LightStream Research analyst Mio Kato, who publishes on investment research platform Smartkarma, called that offer price excessively low.

“We think current shareholders, especially activists, will want a fairly high price,” he said in a research note.

If they accept the current offer, it would still be the largest deal by a private equity firm in the Asia-Pacific region this year, surpassing Blackstone’s (NYSE: BX ) $6 billion bid to acquire Crown . Resorts Ltd in Australia, according to Refinitiv data. It would also be CVC’s largest foray into the region so far.

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For CVC, which declined to comment, the proposal represents another opportunity to expand in Japan, where large companies are under pressure to sell non-core assets and improve shareholder returns. Other deals by the venture capital firm include the $1.5 billion purchase of Shiseido (T: 4911 ) Co. ‘s skin care and shampoo brands.

Any approval by Toshiba’s board of directors will face regulatory review, as Toshiba, which makes products ranging from escalators to sewage plants, is one of the few companies that can build nuclear reactors and also makes other equipment. sensitive, such as lithium-ion batteries for Japan’s military submarines.

Japan’s government would like to make sure Toshiba’s infrastructure work is not interrupted, Chief Cabinet Secretary Katsunobu Kato told a news conference.

“Although it has faced bankruptcy, Toshiba is still one of Japan’s leading companies. It also has many activities linked to state-owned entities, so it seems unrealistic that it could become a foreign-owned, unlisted company.” said Takuro Hayashi, an analyst at Iwai Cosmo Securities.

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