Toshiba’s new CEO says chip sale will proceed even with hurdles
Tokyo, Japan - Toshiba Corp is sticking with its plans to sell its memory chip unit despite regulatory hurdles, said Nobuaki Kurumatani, who took over as the chief executive officer and chairman of the Japanese electronics maker this month.
It would take ‘substantial material’ changes for the company to invoke its right to terminate its sale agreement with a group led by Bain Capital, Kurumatani, a former banker from one of Toshiba’s main creditors, said at a round table with journalists in Tokyo on Tuesday. The company doesn’t see its contractual right to scrap the deal as a ‘pure option’, he said.
Toshiba is in the process of selling its crown-jewel memory unit to a consortium led by Bain Capital to help cover billions of dollars of losses after its US nuclear unit went bankrupt. The US$19bn sale, originally scheduled to close by March 31, has been held back by a delay in regulatory approval from China. Under the agreement’s terms, the new deadline for closing would then be May 1, and Toshiba would need to be cleared by April 13 in order to meet that timeline.
“Waiting for approval from Chinese authorities is all that’s left to do,” Kurumatani said. “Not getting the approval would qualify as a material change.”
Officials at China’s Ministry of Commerce could impose conditions that would impact the value of the business, such as requiring Toshiba to freeze prices or separate its solid-state disk and chip memory operations. If the Bain deal falls apart, Toshiba has at least three options: Re-negotiate the terms, potentially at a higher price, take the memory chip business public or retain the division.
The proceeds from the chip sale could be used for acquisitions, Kurumatani said, declining to give further details.