Toshiba’s chip-unit sale might miss May deadline

Bloomberg

Toshiba Corp. is all but guaranteed to miss a May 1 deadline to sell its memory chips business to a Bain Capital-led group, people familiar with the matter said, raising the chances it may consider other options that could yield billions of additional dollars for the unit.
Chinese regulators are now conducting a third review of the deal, which is due to be completed by May 28, said one of the people, asking not to be identified because the discussions aren’t public. The process was originally supposed to be wrapped up by March 31. Toshiba and Bain want to finalise the current agreement, but they can’t wait forever, another person said. Toshiba shares rose as much as 5.3 percent in early trade on Monday, the biggest intraday jump since November.
Toshiba may be able to fetch a higher price for its semiconductor unit if it seeks alternatives to the 2 trillion yen ($18.6 billion) sale. The division is probably worth at least $22 billion to $24 billion now and Toshiba could realise that value through an initial public offering or a renegotiated sale agreement. The Tokyo-based company originally put the business on the block under duress when it needed billions to pay for losses in its nuclear operations, but it has since raised cash to alleviate those concerns. The possibility of an alternative scenario is increasing, according to Amir Anvarzadeh, senior strategist at Asymmetric Advisors in Singapore.
“This should be a short-term positive for its shares,” Anvarzadeh wrote in a note.
A representative for Bain wasn’t immediately available for comment. Toshiba hasn’t made any decision to cancel the transaction, spokeswoman Midori Hara said, responding to a report in the Mainichi newspaper that the deal was in danger. The company intends to close the transaction as soon as possible, she said.
Nobuaki Kurumatani, who just took over as the chief executive officer and chairman of the Japanese electronics maker, said earlier this month he is committed to selling the chip unit despite regulatory hurdles. But he also warned at the time that if China rejected the deal Toshiba and Bain would have to reconsider.
The sale may have been caught up in the increasingly acrimonious US-China trade dispute because Bain is an American company, one of the people said.
“Waiting for approval from Chinese authorities is all that’s left to do,” Kurumatani, 60, said in an interview this month. “Not getting the approval would qualify as a material change.”