Japan’s Toshiba completes NuFlare takeover, snubs minority holders

FILE PHOTO: A logo of Toshiba Corp is seen on a printed circuit board in this photo illustration taken in Tokyo July 31, 2012. REUTERS/Yuriko Nakao/File Photo

Toshiba Corp. said it completed a takeover of NuFlare Technology Inc. despite a higher competing offer, in a snub to minority shareholders.

The Japanese conglomerate acquired 5,450,695 shares of NuFlare, clearing the 14.27% minimum needed for its bid to succeed, Toshiba said in a statement on Friday. While the 11,900 yen per share price it paid is a 45% premium to where the stock traded before news of the deal broke in November, it’s less than the 12,900 yen Hoya Corp. was prepared to pay.

Toshiba was already NuFlare’s biggest shareholder with 52.4% when it initiated the buyout. Toshiba Machine Co., an independent company that retains the former parent’s name and the second-largest NuFlare stockholder, late on Wednesday said it will sell its 15.8% stake to Toshiba.

“Just because the stock went up, it doesn’t mean it was done right,” said Travis Lundy, a special-situations analyst who writes for Smartkarma. “A lot of Japanese companies trade inexpensively precisely because shareholders don’t expect to be treated fairly.”

Hoya offered to spend as much as 148 billion yen ($1.35 billion) for NuFlare, seeking a minimum of 66.7% of the chip-equipment manufacturer. At the time, Hoya said it hadn’t discussed the bid with NuFlare or Toshiba in advance for fear of the information leaking out and driving up the price. Toshiba Chief Executive Officer and Chairman Nobuaki Kurumatani has said that NuFlare wouldn’t be able to survive outside of the group and he has no plans to sell his stake. After Toshiba’s announcement, Hoya said it would not pursue its tender any further.

“We saw it as a 50-50 chance to begin with,” said Taishi Arashida, a spokesman for Hoya. Arashida said there is still room to discuss acquisition or some kind of a partnership with Toshiba.

NuFlare dominates the market for mask writers, which are used for imprinting patterns on glass squares slightly bigger than a CD case that act as a stencil for semiconductor designs. Hoya is one of only two companies in the world — the other being Japanese compatriot AGC Inc. — capable of making the blank masks used in next-generation extreme ultraviolet lithography, and it sees a lot of synergy between itself and the acquisition target.

Toshiba hasn’t explained how it arrived at the offer price and it’s not clear how NuFlare fits into the company’s business portfolio, since chip manufacturing hasn’t been core to its business after it spun off memory operations in 2018. NuFlare has said that it saw Toshiba’s bid as the best way to increase the company’s value and that the two of its 10 board directors who had connections to Toshiba group recused themselves from voting on the matter.

“The burden was on NuFlare management and its board to look at the competing bid,” Lundy said. “This conflict of interest between parent-subsidiary and minority shareholders won’t go away.”

Bloomberg

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.