Toshiba Completes Sale of Lucrative Chip Unit

June 1, 2018

Tokyo- Toshiba Corp.said Friday it has completed the sale of its lucrative flash memory unit to a Japanese-U.S.-South Korean consortium for 2 trillion yen, as part of its efforts to restore its financial health, damaged by huge losses from the U.S. nuclear plant business.

The Japanese electronics and machinery maker concluded a contract for the sale with the consortium, led by U.S. investment fund Bain Capital, in September 2017. The sale was delayed by prolonged antitrust screenings in China.

As part of the deal, Toshiba has taken back a stake of some 40 pct in the flash memory company, where the existing management team has been reappointed.

Toshiba said that it will book a profit of 970 billion yen before tax from the sale of Toshiba Memory Corp.

The closing of the sale marked the company's exit from a financial crisis that started with an accounting scandal in 2015.

But Toshiba now needs to draw up a new growth strategy after withdrawing from the flash memory business, on which the company relied for about 90 pct of its operating profit.

For the current business year through March 2019, Toshiba's operating profit is projected to shrink to 70 billion yen, an eighth of the previous year's level, with sales seen dropping about 30 pct to 3.6 trillion yen.

Toshiba is set to compile within this year a new business plan for the five years from April 2019.

Toshiba and another Japanese member of the consortium, precision equipment maker Hoya Corp. <7741>, together hold a majority stake in the flash memory firm in terms of voting rights.

The flash memory company will aim to compete with the global industry leader, South Korea's Samsung Electronics Co., with financial support including from South Korean chipmaker SK Hynix Inc., a member of the consortium. Jiji Press