Toshiba vows to stick to sale pending approval
Toshiba will not use the option of cancelling the $18bn sale of its memory chip unit unless there is any “major material change” in circumstances, the Japanese conglomerate’s new CEO said on Tuesday.
Toshiba was unable to complete the sale to a consortium led by US private equity firm Bain Capital by the agreed deadline of March 31 as it was still awaiting approval from China’s antimonopoly regulator.
Toshiba now has the option under the agreement to cancel the sale without forfeit. Cancelling would give Toshiba the freedom to pursue alternative courses of action, such as renegotiating the sale or conducting an initial public offering, a move activist shareholders have urged the company to consider.
“We will maintain our stance and wait [for Chinese regulatory approval] unless drastic changes occur,” CEO Nobuaki Kurumatani said. Toshiba aimed to complete the sale as soon as possible, he said.
Asked what was meant by drastic change, Kurumatani cited the failure to receive Chinese regulatory approval or some unforeseen situation involving the consortium.
He declined to comment on any plans should the deal fail to receive approval by Toshiba’s shareholders at the annual meeting in June.
In April, Kurumatani became the first outsider to lead Toshiba in half a century. The conglomerate is working to recover from the worst years in its 142-year history, after a $1.3bn accounting scandal beginning in 2015 and the bankruptcy of its US nuclear power subsidiary in 2017.
Kurumatani, a former banker who headed the Japanese arm of private-equity firm CVC Capital Partners, is equipped with a network of personal connections that includes politicians, bureaucrats and finance industry executives. He said he aimed to compile a five-year turnaround plan by the end of 2018 after reviewing Toshiba’s business portfolio.
The chip business accounts for most of Toshiba’s profit, while the conglomerate has struggled to grow other core businesses such as social infrastructure. Under the sale agreement, Toshiba plans to repurchase 40% of the unit.
Kurumatani said he aimed to shift Toshiba’s focus to serviceoriented businesses that integrate manufacturing with digital technology.