Toshiba buyout and shopping on TikTok

Hello everyone, this is Akito from Singapore.

As some of the readers of this newsletter may remember, Japanese electronics conglomerate Toshiba once had a symbolic billboard at the heart of Times Square in New York. The uppermost sign on One Times Square, the building best known for the ball drop watched by millions worldwide on New Year’s Eve, it flashed the company’s logo and displayed the annual countdown.

Ironically, this Toshiba billboard first appeared in 2007, the same year Apple introduced the iPhone. At that time, Toshiba had a solid global business in consumer digital products such as notebook computers and flat-panel TVs. But today, the company has lost this brand power.

One reason is that tech giants like Apple have squeezed Toshiba and other Japanese electronics companies out of the global consumer device market. But the decisive blow for Toshiba was caused by accounting scandals uncovered in 2015 and a massive loss on its Westinghouse Electric subsidiary.

Faced with these crises, Toshiba sold its TV business to China’s Hisense in 2018. The same year, it divested the PC business to Sharp, owned by Taiwanese parent Foxconn, and pulled down its Times Square billboard to cut costs. Toshiba’s annual sales have decreased 60 per cent since the fiscal year ending March 2008, when the company had its signage in Times Square, and the management turmoil has continued for almost a decade.

And will this finally be the end of Toshiba’s mess?

Toshiba Takeover

A Japanese investor group led by Japan Industrial Partners (JIP) launched a $14bn takeover bid for Toshiba, a move that would end the company’s 74-year history as a public company, writes Nikkei Asia’s Mitsuru Obe. The buyout aims to make decision-making easier and quicker at the Japanese conglomerate, which is 30 per cent owned by activist investors.

Activists invested in Toshiba in 2017 after the company suffered massive losses on Westinghouse Electric. The presence of activist shareholders has sharpened the management’s focus on profitability, but it also has had downsides, such as frequent disagreements between the management and the activists over the company’s long-term course, as some of the investors tended to focus on short-term share price gains.

The tender offer by the Japanese investor group will run for 30 days through September 20, during which the consortium aims to acquire at least two-thirds of Toshiba’s 432mn shares. The offer price of 4,620 yen per share values Toshiba at 2tn yen. On Monday, Toshiba reported a net loss of 25.3bn yen for the April-June first quarter on a 5 per cent drop in sales to 704bn yen.

“The buyout is structured in a way that would prevent the investors from directly getting involved in the operations of the company,” Toshiba CEO Taro Shimada said during a news conference. “We would like to reciprocate the investment by growing the company and raising its corporate value.”

Red tape in the way

Beijing is getting in the way of Big Tech’s electric vehicle efforts, with red tape stalling the carmaking ambitions of search giant Baidu, smartphone maker Xiaomi and ride-hailing group Didi.

The tech groups, all latecomers to China’s EV blitz, are having difficulty securing regulatory approvals to begin making and selling their debut cars, six people told the Financial Times’ Ryan McMorrow.

“We have hundreds of engineers waiting around doing nothing,” said an employee at one of the companies waiting for the regulatory greenlight.

Chinese officials have dragged their feet on approving new entrants amid overcapacity — the country is capable of making 40mn vehicles a year but has demand for less than 25mn — as well as EV company failures leaving drivers with cars that cannot be fixed or serviced.

Baidu’s electric vehicle arm Jidu was to be made in a partnership with Geely but the two companies are in negotiations to revamp the joint venture to bypass the regulations. Xiaomi has built a plant on the outskirts of Beijing, but is yet to receive the go-ahead to sell cars made there. Didi’s efforts have stalled, leaving its state-owned partner to fall deeper into debt.

Shopping on TikTok

TikTok is emerging as one of south-east Asia’s most prominent ecommerce platforms, with sales growing sevenfold in one year as it attracts young, tech-savvy users with shopping and entertainment features, write Nikkei staff writers Tsubasa Suruga, Nana Shibata, and Norman Goh.

Viewers can ask a seller questions and make real-time purchases via TikTok Shop, the short-video platform’s integrated shopping feature. It has aggressively gained traction in south-east Asia, growing its estimated gross merchandise value (GMV) — the total worth of goods sold through its platform — sevenfold from $600mn in 2021 to $4.4bn last year, according to a Singapore-based consultancy.

While TikTok is still dwarfed by incumbents like Singapore’s Shopee, which took close to half of the region’s GMV last year, TikTok could pose a threat to rivals, as it is one of the fastest-growing platforms. In July, TikTok boasted that of the 325mn monthly users in the region, one in four have bought items through TikTok Shop.

“We truly converge content and commerce like no other platforms,” said Shant Oknayan, TikTok’s Asia Pacific and Middle East business head, at an event in Jakarta.

Arm’s new investors

Leading global tech companies, including Apple, Samsung Electronics, Nvidia and Intel, will invest in Arm as the SoftBank Group’s British chip design unit plans to float its shares in an initial public offering on Nasdaq in September, write Nikkei staff writers Masayuki Shikata and Akira Yamashita.

The unit’s market capitalisation is expected to be more than $60bn, making the deal the world’s biggest initial public offering this year. The chip designer’s valuation has doubled since SoftBank bought the company in 2016 for £24bn ($31bn at the time).

Currently, 75 per cent of Arm’s shares are owned by SoftBank, while the remaining 25 per cent stake is held by the SoftBank Vision Fund, a unit that invests in tech companies worldwide. The Vision Fund will sell 10 per cent to 15 per cent of its Arm shares on the open market. And Arm plans to welcome the big tech companies as medium- to long-term shareholders, selling them stakes of a few per cent each.

After purchasing Arm in 2016, SoftBank has made it a pillar of the group. It agreed to a $40bn buyout offer from Nvidia in 2020, but abandoned the deal after regulators voiced opposition. Since then, SoftBank has been trying to take the unit public.

Suggested reads

1. Tesla relies on China for 40% of battery supply chain: analysis (Nikkei Asia)

2. Amazon in talks over becoming anchor investor in Arm IPO (FT)

3. Japan’s Twitter-like Misskey to form company in bid for survival (Nikkei Asia)

4. TSMC to build $11bn chip plant in Germany (FT)

5. Hong Kong approves first retail cryptocurrency exchanges (Nikkei Asia)

6. China’s Ant Group swaps stake in India’s Paytm for debt (FT)

7. Indonesia startup Storial works to shake up book publishing (Nikkei Asia)

8. South Korean politician urges US to abandon China chip strategy (FT)

9. How China cornered the market for clean tech (FT)

10. Sony Group’s Q1 profit declines due to weighty investments (Nikkei Asia)

#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.

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