TOKYO -- Toshiba has asked potential bidders for its memory chip business to peg the operations' value at 2 trillion yen ($17.6 billion) or more, aiming to maximize income from the sale of its crown jewel.
The ailing Japanese industrial giant will soon reopen bidding to invest in the memory chip business to be spun off. More than 10 companies and investment funds expressed interest in an initial round in early February, apparently placing the unit's total value between 1.5 trillion yen and 2 trillion yen. At that time, Toshiba restricted the stake any investor could take to less than 20%. Shares were to be sold at the end of March.
Now, Toshiba believes it could fetch more for the operations. The company notified concerned companies by Tuesday of new bid conditions, including the 2 trillion yen valuation and a minimum 50% investment. Companies such as Western Digital of the U.S. -- which has worked with Toshiba on semiconductor manufacturing -- and Micron Technologies are thought likely to apply, alongside multiple investment funds.
Toshiba's board will hold final discussions on such matters as the spin-off at a meeting Friday. An emergency shareholders' meeting will be held in late March to officially decide on the spin-off taking place at the end of that month. Shares will be sold in April or later.
Toshiba had initially aimed to retain management control over memory operations and keep the new unit as a core member of its group. Toshiba is the No. 2 player globally in memory chips, many of which go into such devices as smartphones. The business generated 110 billion yen in operating profit in the year ended March 2016.
Prospective buyers also wanted control of the business -- something a stake under 20% would not allow. Investment in the new memory unit thus "held little appeal," according to one foreign investment fund. Toshiba feared its prized operations may not fetch what they were worth.
Those fears became all the more relevant on Feb. 14, when the company revealed its net worth could plunge to minus 150 billion yen by the end of fiscal 2016 unless something was done. Selling off 50% or more of the memory business for 1 trillion yen or so would let Toshiba fill that hole.