TOKYO -- Toshiba is in late-stage negotiations to sell its white goods business to Chinese household appliance giant Midea Group, a move that would mark another chapter in Japan's drastically changing home electronics industry.
The Japanese electronics titan is looking to offload to Midea the majority of shares held in fully-owned subsidiary Toshiba Lifestyle Products & Services by this summer. The deal is expected to fetch tens of billions of yen. The two sides are currently finalizing such details as sales channels in Japan and employment of workers.
Toshiba, currently trying to rebuild itself after an accounting scandal, manufactures most of its white goods in Indonesia and other offshore locations. That exposure has led to declining profitability due to the weak yen. The household appliance operation, including white goods, reaped about 220 billion yen ($1.9 billion) in sales in fiscal 2014. The segment is believed to be in the red and will require a drastic overhaul.
Other companywide moves include selling Toshiba's medical equipment subsidiary to Canon, a deal set to be inked by Friday, and integrating its personal computer division with Vaio and Fujitsu's PC segment.
Toshiba was considering merging its white goods operation with Sharp as part of a restructuring led by the Innovation Network Corporation of Japan, a public-private fund. But with Sharp now set to be bought out by Taiwan-based Hon Hai Precision Industry, Toshiba shifted focus to potential Chinese and Turkish buyers.
The Japanese company picked Midea for its deep connections with the company that would make a business transfer easier. The two firms signed a technological cooperation agreement and also set up a joint air conditioning venture.
Midea posted over $23 billion in operating revenue in 2014. At 4.6%, the company holds the second-largest global share in white goods in unit terms, data from British research firm Euromonitor International shows. The manufacturer is strong in air conditioners and washing machines.
The Toshiba deal will allow the Chinese company to make a full jump into the market. Midea is also looking to expand in Southeast Asia.
The negotiations represent another foreign company taking over a Japanese household appliance business amid a stagnating domestic market. In addition to the Sharp purchase by Hon Hai, Panasonic sold the white goods operation it took over from Sanyo to China's Haier Group in 2012.