Toshiba Corp. announced Thursday that it will complete the sale of its memory chip subsidiary Toshiba Memory Corp. on June 1, after receiving all required approvals Tuesday from Chinese antitrust authorities to sell the business to a Japan-U.S.-South Korean consortium.
By clearing the biggest hurdle for the sale of the unit to the consortium, led by U.S. investment fund Bain Capital Private Equity, Toshiba will be able to make significant improvements to its financial base.
If the sale is completed, Toshiba's shareholders' equity is expected to exceed 1 trillion yen, which will restore Toshiba to the sound financial condition it was in before its accounting irregularities were discovered in 2015. The company aims to strengthen its financial base with funds obtained through the sale and invest in, among other fields, infrastructure projects that will become a main pillar of the company's future business.
The memory chip business is said to require an annual investment of hundreds of billions of yen to maintain competitiveness in the market, the conditions of which also keep changing drastically. The sale of Toshiba Memory will set Toshiba free from such burdens and risks. At the same time, however, the company will lose a cash cow that earns about 90 percent of its operating profits. This means Toshiba will face the task of boosting its earning capacity.
Toshiba was found to have suffered huge losses in its overseas nuclear power business at the end of 2016, causing excessive liabilities. That prompted it to sign a deal to sell Toshiba Memory to the Bain-led group for 2 trillion yen in September last year.
Toshiba initially aimed to complete a sales procedure by the end of March, but it has been delayed because of prolonged screening by Chinese authorities.
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