Toshiba mulling spin-off of semiconductor business to Western Digital or investment funds - report (translated)
Toshiba [TYO:6502] is mulling a spin-off of its semiconductor business, including its flash memory operations, and has entered talks with California-based Western Digital [Nasdaq:WDC] concerning an investment in the new company, the Nihon Keizai Shimbun reported.
The Japanese-language report, which disclosed that Toshiba could set up the new company as soon as the first half of 2017, cited several persons familiar with the situation as saying that Western Digital and investment funds have expressed an interest, with one proposal being the acquisition of about a 20% stake for about JPY 200bn-JPY 300bn (USD 1.8bn-USD 2.7bn). Due to antitrust laws it is not clear which investor will be the final winner, the report said.
Faced with hundreds of billions of JPY in losses at its nuclear generation business in the US, Toshiba is scrambling to secure investment capacity in its semiconductor business to eliminate fears about its financial affairs, the report said.
Toshiba and Western Digital already jointly operate a flash memory plant in Mie Prefecture, the report noted. The new company would remain majority-owned by Toshiba, and the flash memory plant will continue to be jointly operated by the two companies, the report said. A future public listing for the new company is also possible, the report added.
In addition to securing short-term funds through the spin-off and sale of the unit, the deal would allow Toshiba to more easily obtain annual financing of several hundreds of billions of JPY for research and development from financial institutions, the report said.
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