China Gives Go-Ahead for Toshiba's Chip Unit Sale, Now Set for June 1

Tokyo, May 17 (Jiji Press)--Chinese antimonopoly authorities have finally approved Toshiba Corp.'s sale of its flash memory unit to a consortium of Japanese, U.S and South Korean companies, Toshiba announced Thursday. Given the go-ahead, Japanese electronics giant under business reconstruction now plans to complete the 2-trillion-yen Toshiba Memory Corp. deal with the consortium led by U.S. investment fund Bain Capital on June 1. The deal, concluded in September 2017, will give Toshiba a windfall profit of 970 billion yen, significantly improving its financial standing. Toshiba initially planned to sell the chip arm by the end of March, the final month of the previous business year, after going through screenings by authorities in the world. But the company could not make it due to the prolonged examination in China. While waiting for China's approval, Toshiba came under pressure from some shareholders not to give up the chip unit, which has been earning 90 pct of the group's operating profit. Toshiba decided to sell the crown jewel, after it saw its debts exceeding the assets at the end of March 2017 due to huge losses in the U.S. nuclear power plant business. The sale was part of Toshiba's efforts for not remaining in the state of negative net worth for the second consecutive business year to prevent its shares from being delisted from the Tokyo Stock Exchange. But in preparation for a delay in the Chinese antimonopoly screening, the company reinforced its capital by 600 billion yen through a third-party new share allotment at the end of December last year to escape the stock delisting without the sale. Under the deal with the consortium, also including South Korean chipmaker SK Hynix Inc. and U.S. technology giant Apple Inc., Toshiba will reinvest in Toshiba Memory to take a stake of some 40 pct. Innovation Network Corp. of Japan and the Development Bank of Japan, both affiliated with the Japanese government, also plan to invest in the company after the sale. END