Toshiba has "mostly given up" on its agreed sale of its memory chip unit, as Chinese competition clearance appears increasingly unlikely, the Wall Street Journal reported citing people involved in the matter. The company is considering alternatives to selling the unit to the Bain-led consortium.
Chinese authorities have been generally uncommunicative about the status of Toshiba’s application in recent weeks, people involved in the effort told the paper. The brush-off comes during a period of heightened trade tension between China and the US, home to Bain Capital and others in the consortium that agreed to buy the Toshiba unit last year.
People involved in the potential transaction say that under Chinese guidelines, regulators have until the end of this month to screen the Toshiba submission and that a last-minute approval isn’t out of the question. Representatives of Toshiba and Bain said they were waiting for China’s decision.Initially the parties hoped to close the deal by the end of March and saw Chinese approval as likely because they believed the deal would create a stronger competitor against market leader Samsung Electronics. That sentiment changed in March as trade tensions heated up, and Toshiba was forced to delay the closing.
Toshiba's finances have improved since it agreed the sale and it is now reviewing alternatives such as listing the chip unit on a stock exchange, changing the composition of the buyer group or keeping the chip unit as a full part of Toshiba, people involved in the discussions told the WSJ. Some investors outside Japan have been urging the company to cancel the deal, saying Bain’s price of JPY 2 trillion (USD 18 billion) was too low.
In a statement responding to the article, Toshiba said it still intends to close the memory business transaction "as soon as possible", and has not made any alternative policy decisions, including termination of the transaction under certain circumstances.
