TOKYO -- The Japanese conglomerate Toshiba has decided to spin off its mainstay memory chip business in an attempt to battle massive write-downs at its U.S. nuclear power business.
Toshiba announced the decision on Friday after holding a board meeting on the matter. "Given the possibility of a loss on impairment [from the U.S. nuclear power business], Toshiba Group needs to enhance its financial structure, and the company is considering various capital measures," the company said in a statement. "In this company split, the company is considering an injection of third-party capital as a financial measure."
The embattled company will hold an emergency shareholders meeting at the end of March to get approval for the plan. Toshiba is hoping to complete the sale by the end of that month.
Toshiba said in the statement that details of the spinoff are still undecided, but The Nikkei has learned that Toshiba will look to sell 19.9% of the spun-off unit and expects to fetch around 300 billion yen ($2.61 billion). Toshiba values the independent company at 1.5 trillion yen. Getting 300 billion yen would mean Toshiba would reap a 200 billion yen gain on the sale, according to people familiar with the matter.
A conservative estimate of Toshiba puts shareholders' equity plus net profit at around 600 billion yen as of the March 31 fiscal-year end. The nuclear write-downs, which could reach as high as 700 billion yen, could wipe out that figure, but a 200 billion yen profit on the spinoff would help ease the pain.
Various companies have shown an interest in Toshiba's memory chip business. Hard-drive maker Western Digital, which partners with Toshiba on memory chips, has already submitted an investment proposal, while South Korea's SK Hynix, also a Toshiba partner on memory chips, is closely following developments, the company said on Thursday.
American chipmaker Micron Technology has emerged as a candidate as well. But Toshiba is reluctant to sell to memory chip competitors because of antitrust issues and other concerns.
Other interested parties include U.S. private-equity company Silver Lake Partners. Japan's Canon, which had been seen as a potential investor, is leaning against the memory chip investment as it prioritizes other fields, such as health care and internet-connected surveillance cameras.