The roller-coaster ride that Toshiba is going through with its memory business, that is inextricably linked to its U.S. nuclear power business, could eventually result in the launch of an IPO for Toshiba Memory, if it fails to win regulatory approval for its sale to the Bain Capital0-led consortium before March 2018.
On Monday, the Financial Times reported, Toshiba Corp is weighing the options of launching an IPO for its prized memory chip business in the event of its $18 billion sale to Bain Capital-led consortium fails to gain antitrust approval by the end of March 2018.
The Financial Times reported citing sources familiar with the plans as saying the IPO is one of various contingency plans being drawn up by Toshiba’s top executives, with some Toshiba shareholders and analysts favoring it over the existing deal.
In September 2017, Toshiba had agreed to sell Toshiba Memory, its memory business – the world’s second-biggest producer of NAND chips, to a consortium led by Bain Capital for $18 billon in order to offset its liabilities arising from the bankruptcy of its U.S. nuclear power unit Westinghouse Electric Co LLC.
However with Toshiba no longer facing the intense pressures it did to complete the sale following the successful raising of $5.4 billion (600 billion yen) through the issue of new shares in 2017, which when combined with tax write-offs provide it sufficient leverage to offset its liabilities.
According to sources familiar with the matter, if the sale of its NAND memory business to Bain Capital deal fails to win regulatory approval by March 31 2018, Toshiba will be able to walk away walk away from the deal.
A spokeswoman for Toshiba stated that there is no change in its effort to complete the sale of Toshiba Memory.
A representative for Bain was not immediately available for comment.
Argyle Street Management Ltd, a Hong Kong-based hedge fund with $1.2 billion assets under management has now opposed the sale saying it was no longer required and that Toshiba’s board should instead focus on an IPO for Toshiba Memory.
With the news reaching the market, Toshiba’s shares hit their 3 month high in morning trade.