Toshiba Completes NuFlare Takeover, Snubs Minority Shareholders

Pavel Alpeyev, Bloomberg News

Signage for Toshiba Corp. is seen at the company's headquarters in Tokyo, Japan, on Thursday, Nov. 9, 2017. Toshiba is speeding up investments into a new flash-memory plant even as participation of its joint venture partner Western Digital Corp. remains unclear, ratcheting up the pressure on its U.S. counterpart to resolve a legal spat between two companies. Photographer: Akio Kon/Bloomberg , Bloomberg

(Bloomberg) -- 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.

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

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 proceed with its tender.

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.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net

To contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Peter Elstrom