Toshiba is receiving a bid that could be worth more than $ 20 billion

Toshiba shares rose 18% in Tokyo trading on Wednesday to close at 4.5 4,530, the equivalent of $ 41.26, the highest level since December 2016. This gives the company a market capitalization of nearly $ 19 billion. The Nikkei newspaper said CVC is offering a 30% premium, suggesting the proposal will value Toshiba at just over $ 20 billion.

CVC declined to comment.

The transaction would be one of the largest leveraged acquisitions in history, according to Dealogic, and possibly the largest in Asia, rivaling the 2018 agreement led by Bain Capital to acquire Toshiba’s flash drive. In a leveraged purchase, a financial company like CVC uses borrowed money to buy a business, usually hoping to improve its operations and sell profitably later.

Japanese government approval would be required for a foreign buyer to acquire Toshiba due to its involvement in Japanese infrastructure business, including the maintenance of nuclear power plants. Fumio Matsumoto, chief strategist at Okasan Securities, said this would add uncertainty to the transaction. However, he said that simplifying the structure of Toshiba’s shareholders could attract regulators after recent disputes between foreign shareholders and Toshiba’s management.

Asked about Toshiba, government spokesman Katsunobu Kato said it was important to keep the business running smoothly.

At a special meeting in March, shareholders approved a proposal by Effissimo Capital Management Pte. to appoint investigators to examine whether the vote at a shareholders’ meeting last year was conducted correctly.

Foreign shareholders have taken a growing role in the Japanese industrial conglomerate, since it raised billions of dollars in 2017 to strengthen its balance sheet. This followed the bankruptcy of its US nuclear subsidiary, Westinghouse Electric Co.

Toshiba chief executive Nobuaki Kurumatani was chairman of the HVAC unit in Japan before joining the company.

Toshiba has shrunk since an accounting scandal broke out in 2015. It sold a controlling stake in its flash drive, while retaining a minority stake and giving up medical, consumer electronics and home appliances companies to focus on such as energy and infrastructure.

Write to Kosaku Narioka at [email protected]