According to sources, Toshiba Corp. is thinking of raising at least 8.8 billion dollars (about 1 trillion yen) from the stake of its memory chip business and they are hoping to finish up their transaction by March 2018.
The source, who has asked not to reveal them as this is a private matter, said that this deal would definitely result in the company relinquishing the majority control over their chip unit, which is supposedly going to be valued at about 2 trillion yen. According to the source, the company is planning to take some time negotiating the best possible price and they are not going to set a concrete deadline, but the company aims at reaching an agreement by the end of next fiscal year. There were no comments from any Toshiba spokesmen.
Toshiba’s nuclear division have them grappling with write-downs of $6.3 Billion due to the massive overruns of cost in their China and US nuclear power plants. Satoshi Tsunakawa, the President of Toshiba, said last week that selling the company’s majority stake of the highly prized chip business, which makes flash memory chips is going to shore up their balance sheet. A lot of local media, which includes Sankei newspaper, had reported this fundraising target on Tuesday morning.
The Japanese business icon is going to be demoted from first tier to second section in Tokyo Stock Exchange due to its deteriorating finances. Sources told Bloomberg that last week the company did not see any way of avoiding the demotion since the liabilities have already exceeded the assets. According to the sources, Toshiba will be taking its time to negotiate the best possible deal for their employees and shareholders rather than meeting exchange requirements.
Many companies have publicly expressed their interest in chip business of Toshiba like SK Hynix Inc. of South Korea. Some partners with Toshiba like Western Digital Corp. and Micron Technology Inc. are also potential bidders. Toshiba is right behind the market leader in the chip business market with about 20% of the $30 billion market. Samsung Electronics Co. leads with one third of the complete market. After Toshiba comes Western Digital, Hynix, and Micron.
The source also said that even foreign buyers are thinking of buying stake in Toshiba chip sale, but they would have to abide by all the requirements like maintaining employment and keeping production in Japan. Yoshihide Suga, the Chief Cabinet Secretary of Japan said last week that the flash memory chips, which are used in solid state drives and smartphones, are extremely important tech for the growth strategy of the nation.
We can just hope that Toshiba management makes the correct decisions for the nation as well as the company.