TOKYO (Reuters) -Shares of Tokyo Electric Power Co (Tepco) fell more than 7% on Wednesday after a news report that the Japanese power utility is considering joining a state-backed fund to buy Toshiba (OTC:TOSYY) Corp.
Tepco is considering joining a partnership between state-backed Japan Investment Corp and Japan Industrial Partners to bid for Toshiba, and is eyeing the conglomerate's nuclear business, Bloomberg News reported.
Tepco spokesperson Ryo Terada told Reuters it was not true. Toshiba said it would not comment on details of the bidders and their proposals.
Such a move by Tepco would mark a major development in the contest for Toshiba, which last month said it had received eight buyout proposals and two offers for capital alliances. Weakened by a series of scandals, the conglomerate has promised to consider all options, including private equity buyouts, as part of a far-reaching review process.
Shares of Tepco fell 7.2% to 606 yen, on track for their biggest one-day drop since September as the market appeared to worry about the impact of a potential acquisition on Tepco's finances.
The participation of local funds is seen as critical to winning government approval for a Toshiba buyout as some of the conglomerate's key businesses - including defence equipment and nuclear power - are seen as strategically important to Japan.
Tepco, Toshiba, utility Chubu Electric Power and Hitachi (OTC:HTHIY) Ltd in 2019 said they agreed to consider cooperating on their nuclear plant businesses, a move seen as opening the door to closer collaboration in the Japanese industry.
Tepco, one Japan's 30 largest firms by revenue, is 2.7% owned by the Tokyo Metropolitan Government, its third-largest shareholder, according to Refinitiv. The utility owns the Fukushima Daiichi nuclear plant crippled by an earthquake and massive tsunami in 2011 that touched off the world's worst nuclear disaster since Chernobyl.
Japan's Supreme Court in March upheld an order that Tepco pay damages of around $12 million to about 3,700 people whose lives were devastated by the nuclear crisis, covering the first three of some 30 class-action suits the utility faces.
The court ruled it negligent in taking preventive measures against a tsunami of that size.
Japan idled most of its nuclear plants in the aftermath of the Fukushima disaster but rising energy prices now have sparked expectations it could begin to restart them.