Toshiba set to sign chip business sale to US-S. Korea-Japan group
Toshiba was set to sign a deal shortly to sell its prized memory chip business to a consortium of US, South Korean and state-backed Japanese investors, a leading business daily said Tuesday. The loss-hit conglomerate is to sign the deal in the next couple of days in a crucial step to raise money for its revival, the Nikkei newspaper said.
TOKYO — Toshiba was set to sign a deal shortly to sell its prized memory chip business to a consortium of US, South Korean and state-backed Japanese investors, a leading business daily said Tuesday.
The loss-hit conglomerate is to sign the deal in the next couple of days in a crucial step to raise money for its revival, the Nikkei newspaper said.
Toshiba has taken massive losses in its US nuclear operations that have raised doubts about the future of one of Japan’s best-known companies.
The firm said last week that it would hold exclusive talks with a consortium including the public-private Innovation Network Corp of Japan, the state-backed Development Bank of Japan, and US private equity fund Bain Capital.
The company said it is aiming to finalize the sale of its chip business by a general shareholders’ meeting set for Wednesday.
“As we said last week, we are working toward making a final contract by (June) 28th,” Toshiba spokesman Yukihito Uchida told AFP.
The alliance’s bid for Toshiba’s coveted flash-memory business is reportedly worth more than ¥2 trillion ($18 billion), the Nikkei said without citing sources.
South Korean chip giant SK Hynix will participate as a lender in the deal, it said.
Toshiba on Friday delayed the release of its long- overdue earnings — the latest in a string of delays — with the troubled conglomerate saying it needed more time to finish accounting work at its loss- hit US nuclear unit Westinghouse Electric, which is now sitting in bankruptcy protection.
The sale of the memory chip business also faces hurdles as US chip factory partner Western Digital tries to block the sale with a court injunction.
Shares in Toshiba were down 0.73% at ¥296 in early trade after the Nikkei report.
TOSHIBA’S LANDIS+GYR
The field of prospective bidders for Japanese conglomerate Toshiba Corp.’s Swiss-based smart meter group Landis+Gyr has narrowed to two, three banking sources said on Monday.
The two — Goldman Sachs Group, Inc.’s private equity arm and Canada’s Onex Corp. — are undertaking due diligence checks, the sources said.
A consortium of buyout firm CVC Capital Partners and Japanese conglomerate Hitachi Ltd had withdrawn its offer, as had Honeywell International, Inc., the sources said.
A first round of bids for Landis+ Gyr, for which bankers are preparing debt packages of around $1 billion or 5-6 times its $200 million EBITDA (earnings before interest, tax, depreciation and amortization), closed in May and binding offers are expected in July.
Goldman Sachs and Landis+Gyr declined to comment. CVC declined to comment, while Hitachi and Onex were not immediately available for comment.
Toshiba is also preparing for an initial public offering ( IPO) of Landis if final bids fall short of its expectations, as the Japanese company scrambles to raise funds to cover massive losses at US nuclear unit Westinghouse.
Toshiba hired UBS this year for the deal and later added Morgan Stanley, Credit Suisse and JP Morgan to help with the potential IPO.
CVC and Hitachi, whose initial preemptive offer of almost $2 billion to buy Landis+Gyr was declined, as well as Honeywell decided not to pursue deals due to the likely valuation and the prospects of a listing, the sources said.
One of the sources said the company was aiming for offers 12 times EBITDA, which deterred many bidders.
There has been a wave of mergers and acquisitions activity in the metering industry. CVC is selling German metering and energy management group Ista, which could be worth up to €4.5 billion, while German metering group Techem could be put up for sale this year.
Toshiba bought Landis+ Gyr in 2011 for $ 2.3 billion jointly with state- backed Innovation Network Corporation of Japan, which holds the remaining 40% in the company.
Landis+ Gyr, in which Toshiba has a 60% stake, employs more than 5,700 staff and is active in over 30 countries. —