Toshiba shares surge after it opens door to considering a buyout

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TOKYO — Shares of Toshiba Corp jumped nearly 5% in Tokyo trade on Friday, after the embattled Japanese conglomerate said it would solicit potential buyout offers, bolstering hopes of a lucrative exit for its hedge fund investors.

Toshiba, which has been locked in a years-long battle with some of its major shareholders over its direction, said on Thursday it had hired Nomura Securities as a financial adviser on strategic alternatives, including a potential deal to take it private.

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The timing of the announcement – just before an annual general meeting expected in June – likely speaks to the continued pressure that the company has faced from investors, who have called on the company to consider a buyout.

Shares of Toshiba finished 4.7% higher at 5,400 yen, after earlier touching their highest since May 2013.

Toshiba said it was committed to obtaining “executable proposals” on going private or other alternatives, and to provide transparent updates on the process to shareholders.

Its top shareholder, Effissimo Capital Management, said last month it had agreed to sell its stake to Bain Capital if the U.S. private equity firm launched a tender offer, a move that was seen as potentially putting pressure on Toshiba to revive buyout talks.

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Bain has said nothing had been decided about a takeover bid. The Nikkei business daily has reported the firm is planning to team up with Japanese investment funds to make an offer.

The participation of local funds is seen as critical, given that some of Toshiba’s assets – including defense equipment and nuclear power – are seen as strategically important in Japan.

It isn’t clear if a buyout would lead to a change in management or scuttle new CEO Taro Shimada’s plan to boost subscription revenue by tying software to hardware.

Shareholders last month voted down a management proposal to spin off Toshiba’s devices unit. (Reporting by David Dolan; Editing by Christopher Cushing and Edwina Gibbs)