What's going on?

Private equity firm CVC Capital made a $20 billion offer to buy Japanese conglomerate Toshiba on Wednesday, in what would be the country�s biggest leveraged buyout in history.

What does this mean?

In a leveraged buyout, a private equity firm � Europe�s CVC, in this case � borrows money to buy a business, typically hoping to improve its operations and sell for a profit later on. And given that global investors see Japanese conglomerates as particularly inefficient, it�s a strategy that could work out well for Toshiba and its shareholders.

Toshiba�s shares surged 18% to a four-year high on the news of CVS�s offer, but it�s fair to say those investors might be getting ahead of themselves. The government has to sign off on any takeover bids made by foreign private equity firms, and considering Toshiba�s in charge of the country�s nuclear power plants, this one�s going to be under even more scrutiny�

Why should I care?

The bigger picture: Private equity firms aren�t through with Japan yet.
Private equity firms see Japan as one of the most target-rich markets in the world, and it shows: they�ve announced $15 billion worth of buyout deals focused on Japanese firms in the last twelve months, according to Bloomberg. This Toshiba takeover would be CVC�s second major deal in the country this year alone, after it agreed to buy Shiseido�s personal care business for $1.5 billion in February.

For markets: Welcome to the Land of Rising Activism.
Activist investors have increasingly been flexing their muscles in Japan over the last few years, pushing management teams to make reforms that�ll give shareholders more bang for their buck. That hasn�t gone unnoticed by Toshiba: the company � which was forced to issue $5.3 billion of new shares after a brush with bankruptcy in 2017 � is heavily owned by foreign activist funds, which just won a landmark vote to investigate the company�s management team.