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Exclusive-Bidders weigh offers valuing Toshiba at up to $22 billion -sources

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© Reuters. FILE PHOTO: The logo of Toshiba Corp at the company’s headquarters in Tokyo, Japan, February 14, 2017. REUTERS/Toru Hanai/File Photo

By Makiko Yamazaki, Kane Wu and Scott Murdoch

TOKYO/HONG KONG (Reuters) -Bidders for Toshiba (OTC:TOSYY) Corp are considering offering up to 7,000 yen ($51.41) per share to take the troubled Japanese conglomerate private, three people familiar with the situation told Reuters, valuing the deal at about $22 billion.

Toshiba, which is exploring strategic options, said this month it had received eight initial buyout proposals and two for capital alliances that would see it remain listed.

The bidders are now discussing an offer price range of up to 7,000 yen a share with Toshiba’s shareholders, the people said, representing up to a 27% premium to Toshiba’s share price of 5,501 yen as of Wednesday’s close.

A separate source said the range of offers was wide and various conditions have been attached.

Toshiba shares rose 5.3% in Tokyo early on Thursday, outperforming a 0.8% rise in the benchmark Nikkei average.

The offer price, if finalised, would value the chips-to-nuclear-reactors conglomerate at 3 trillion yen ($22 billion) at top end of the range.

Toshiba told Reuters it would not disclose details of the proposals.

KKR & Co (NYSE:KKR) Inc, Baring Private Equity Asia, Blackstone (NYSE:BX) Inc, Bain Capital, Brookfield Asset Management, MBK Partners, Apollo Global Management (NYSE:APO) and CVC Capital Partners have submitted initial bids, according to the people.

Some of them may form consortia for a bid, they added.

Bain, Blackstone, Brookfield, Baring, CVC, KKR and MBK declined to comment. Apollo did not immediately respond to a request for comment.

Domestic funds, including Japan Investment Corp (JIC), and a number of strategic players are looking to see how they can participate in the deal, the people said, declining to be named as they were not authorised to speak to media.

JIC declined to comment.

WEAK YEN

If successful, the Toshiba deal would be largest buyout transaction in Japan since a consortium led by Bain took private the conglomerate’s memory chip unit, Kioxia, for $18 billion in 2018.

The discussions are taking place at a time when a weak yen continues to haunt the Japanese economy, threatening to disrupt Japanese firms’ business plans and turn them into attractive acquisition targets for foreign buyers.

The yen plunged to a new 24-year low of 136.71 per dollar early on Wednesday.

Of all the potential bidders, Bain has been “very aggressive” in pushing for a buyout, said two of the people.

A Japanese investment banker with knowledge of the deal separately said even at 6,500 yen per share the valuation for Toshiba seemed “too stretched”.

Ultimately, he said, the price would have to take into account how investors value Toshiba’s 40% stake in unlisted chipmaker Kioxia.

That gave Bain an advantage over other bidders, he said, because the private equity firm owned the bulk of Kioxia, meaning it would decide the fate of the chipmaker, which in turn would impact the valuation of Toshiba.

Bedevilled by accounting and governance crises since 2015, Toshiba set up a special committee in April to solicit proposals after shareholders voted down a management-backed restructuring plan.

The company said earlier it would shortlist bidders for due diligence after its annual shareholders’ meeting on June 28.

($1 = 136.1500 yen)

Stock Markets

Easing chip shortages to help Volkswagen in H2 – CEO

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© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York City, U.S., April 13, 2022. REUTERS/Brendan McDermid/File Photo

BERLIN (Reuters) – Volkswagen (ETR:VOWG_p) sees a strong second half of 2022 and expects progress in catching up with rival Tesla (NASDAQ:TSLA) as easing chip shortages start to offset supply chain bottlenecks and rising costs, the carmaker’s CEO said on Tuesday.

“We are earning more than ever,” Chief Executive Herbert Diess said at a works meeting, adding Volkswagen is ramping up electric vehicle volumes in its biggest markets in Germany and China thanks to easing semiconductor shortages.

This should allow the carmaker to narrow the Volkswagen-Tesla gap this year and meet its goal of becoming market leader by 2025 if it seizes the moment while the U.S. electric car maker burns cash on large investments, the CEO said.

“Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time – as well as expand production in Shanghai. That’s going to take strength out of him,” Diess said.

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Reliance Chairman Mukesh Ambani steps down as director of telecom arm

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© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general meeting in Mumbai, India July 5, 2018. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) – Reliance Industries Chairman Mukesh Ambani has stepped down as director of Reliance Jio Infocomm Ltd, the conglomerate’s telecom arm said on Tuesday.

Reliance Jio said https://refini.tv/3Nrs773 it has appointed Mukesh’s son and non-executive director Akash Ambani as the chairman of its board. Akash has been involved with the telecom unit since its launch in late 2016, where he started as a director.

India’s telecoms sector had been upended after the entry of Jio, which triggered a price war that forced some rivals out of the market and turned profits into losses.

Jio, which started out offering mobile teleservices, has been aggressively investing in services like internet broadband and forging ties with handset makers to launch low-cost smartphones and providing 5G services.

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UBS Downgrades Ebay, Farfetch to Neutral on Guidance Risks

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© Reuters. UBS Downgrades Ebay (EBAY), Farfetch (FTCH) to Neutral on Guidance Risks

By Senad Karaahmetovic

UBS analyst Kunal Madhukar downgraded shares of Farfetch (NYSE:FTCH) and eBay (NASDAQ:EBAY) to Neutral from Buy.

EBAY shares are cut alongside the price target (to $48.00 from $60.00 per share) despite low expectations. Still, the analyst expects 2022 GMV to fall by 17%, which is worse than the guidance of 16%-14% and the Street’s consensus of 15%.

“We think the buy side may already be lower than the Street. YTD, the stock has been one of the better performers within the eCommerce space, benefiting from both a ~2% dividend yield and aggressive share repurchases. However, when the market rebounds, we think EBAY shares could lag smaller cap peers (which are likely to grow much faster in a recovery) until investors have better visibility into organic growth at eBay. Consequently, we think the shares likely will remain range-bound until visibility improves,” Madhukar told clients in a note.

The price target on Farfetch shares goes to $10.00 from the prior $13.00 as Madhukar sees too optimistic assumptions for growth from the side of the company’s management.

“In addition to slower growth, we think upside is limited by lack of visibility into key drivers of value, including FPS volumes and economics, as well as on China. Granted, the YNAP deal could be a positive catalyst (link), but if the disclosure is limited (like with the recent deal with Neiman Marcus Group or NMG), it may be challenging for investors to understand if it creates shareholder value or not. Last, FTCH remains a profitless-tech company in an environment where investors are acutely focused on profits, and thus, there is limited valuation support,” the analyst added.

Similar to eBay, Madhukar sees shares remaining “range-bound until we have better visibility into growth and/or the path to profitability.”

Shares of eBay and Farfetch are down 2.4% and 2.2%, respectively, in pre-market Tuesday.

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