Japan’s Toshiba to spin off chip unit

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TOKYO: Toshiba said on Friday it will spin off its memory chip business, following reports that the vast conglomerate is planning to sell a stake in the unit to repair its battered balance sheet.

Local media in recent days have said the company—dented by a major accounting scandal and huge losses in its nuclear business —is looking to raise as much as $2.6 billion from selling around 20 percent of the chip division.

While it did not confirm any sale plans, Toshiba said Friday it was considering “outside capital” to help restore its finances.

“We have decided a plan to spin off our storage and electronic devices solutions company into a separate firm effective around March 31, 2017,” it said in a statement, referring to the chip unit.


A once-proud pillar of corporate Japan, Toshiba has been besieged by problems, most notably the profit-padding scandal in which bosses for years systematically pushed subordinates to cover up weak financial results.

The firm, which makes everything from laptops to nuclear reactors, said turning the chip unit into a separate firm would help speed up decision making, but added that the business would remain under its umbrella.

A number of potential bidders have shown interest, including camera and copier maker Canon, the world’s top hard-disc producer Western Digital, and global investment funds including Bain Capital and Permira, Japanese media reported.

Toshiba has been selling off cash-cow businesses and assets as it braces for losses in its US nuclear business that could reach 700 billion yen ($6.1 billion).

Last month, Standard & Poor’s downgraded Toshiba’s credit rating in response to the possible losses, which Toshiba is expected to detail in mid-February.

The company has already sold its medical devices unit to Canon and most of its appliance business to China’s Midea Group.

 

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