Toshiba says memory chip unit sale to boost annual profit by a third
TOKYO (Reuters) – Japan’s Toshiba Corp said it expects net income to jump 33 percent this financial year thanks to profits from the planned $18 billion sale of its memory chip unit.
Net profit for the struggling conglomerate is likely to grow to 1.07 trillion yen ($9.75 billion) from 804 billion yen, marking a second consecutive year of profit after years of financial crisis due to accounting scandals and cost-overruns at its US nuclear unit Westinghouse.
Toshiba last year agreed to sell its chip unit to a consortium led by Bain Capital and South Korea’s SK Hynix Inc , but sources have said if the deal is not approved by Chinese regulators this month it may seek to drop the sale in favor of other options.
Sources familiar with the matter say the deadline for China to complete its review of the deal is May 28, and Toshiba is hoping for a decision by then.
Tokyo-based sources involved in the deal also say they are worried that trade friction between Beijing and the United States may affect the pace and outcome of the review, although they are not sure just how much impact it is having.
If the Chinese regulatory approval does not come through, Toshiba can walk away from the deal. It is no longer desperate for cash after a $5.4 billion new share issue to foreign investors late last year, and some activist shareholders have opposed the sale, arguing the deal significantly undervalues the unit.
Toshiba said in a statement on Tuesday it was still planning to sell the unit and would return benefits to shareholders after the sale.
The company expects to post 970 billion yen in profit from the sale.