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After Widening Sale To Majority Stake, Toshiba May Delay Chip Auction: Media Sources

After Widening Sale To Majority Stake, Toshiba May Delay Chip Auction: Media Sources
After Toshiba said it would consider selling most, even all, of the marquee business, there are expectations that the conglomerate may delay the sale of its prized flash-memory chip unit.
"It's moving in that direction (of a delay)," reported the local media citing a source who reportedly spoke on condition of anonymity. As Toshiba's plans for the sale have changed, "the bidders are having various thoughts."
As a multi-billion dollar hole has emerged in recent months in its nuclear business, the TVs-to-nuclear conglomerate is scrambling for cash to stay in business.
After the company said it would consider selling more than the originally planned stake of less than 20 percent of the flash-memory chip business and would book a $6.3 billion hit to its U.S. nuclear unit, its shares sank 9 percent.
Sources said that the sale of the chip business would be pushed beyond Toshiba's planned deadline of the March 31 end of the business year by the changing the rules of the chip auction, which sources have said has generated bids of 200-400 billion yen ($1.8-$3.5 billion).
The source said that the number of potential buyers could be increased and the offers could potentially be improved by the loosening of the deadline which would ease concerns about trying to hurry any antitrust reviews.
The shares of the company could be demoted to the second section of the Tokyo Stock Exchange as Toshiba has accepted that it may remain in negative net worth through the end of the business year. Therefore to keep the funds coming, it would have to convince its lenders.
As some bidders may have other responses to Toshiba throwing open the bidding to include a majority stake or now want management rights due to the result which could also be a rethink of the whole auction, sources said.
Questions about whether Toshiba could well shake up the bevy of suitors interested in a piece of the world's biggest NAND chip producer after Samsung Electronics and whether the company would have a long-term future without control of the unit have been prompted by the change of direction by Toshiba - facing a March 27 deadline to avoid a delisting.
"Usually in a corporate turnaround plan, the company would keep its most competitive business after selling non-performing businesses," said Masayuki Kubota, chief strategist at Rakuten Securities.
"This turnaround plan gives no hope for Toshiba's future," he said.
Sources have also said that one of the main bidders among the companies and fudns interested in Toshiba’s chip business include Taiwan's Foxconn, formally known as Hon Rai Precision Industry.
There were no immediate comments from Foxconn officials.
SK Hynix, Micron Technology and and private equity firm Bain Capital are among the other bidders.
Since it is not a major memory chip maker and could avoid any lengthy anti-trust review, it could be easier to buy a large stake, compared to other corporate bidders is Foxconn, which last year bought a controlling stake in Japanese panel maker Sharp.
Saying it needed more time to look at potential problems at its Westinghouse division, the beleaguered conglomerate failed to deliver audited third-quarter earnings as scheduled on Tuesday, and its new openness towards selling more of its chips business comes amidst such a time.


Christopher J. Mitchell

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