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Toshiba Plans To Sell Its Stake In Chip Giant Kioxia In A Phased Manner After Its IPO

Toshiba Plans To Sell Its Stake In Chip Giant Kioxia In A Phased Manner After Its IPO
Following the completion of the planned launch of its shares through an initial public offering (IPO) later this year, Japan’s Toshiba also plans to unwind its 40 per cent stake in Kioxia Holdings in a phased manner, said reports quoting sources with knowledge of the matter.
The second-largest flash memory chip firm of the world is also contemplating distributing back to its shareholders about half or more of after-tax proceeds that would be generated from the sale, said the reports quoting the industry sources.
Various possibilities for shareholder returns, such as the handling of assets and reviewing its portfolio were being planned by the Japanese industrial conglomerate, said the company in a filing with the Tokyo stock exchange during the week end, the reports claimed.
Toshiba had sold off the former flash memory chips unit, Kioxia, in 2018 to a consortium that was led by US private equity firm Bain Capital in a deal that had generated $18 billion for the Japanese firm. Officially, Toshiba said that it had not decided on what to do with its stake in Kioxia. As part of the deal with the US conglomerate, Toshiba had purchased its Kioxia stake.
According to previous reports that had quoted sources, the initial public offering of Kioxia could be the biggest listing this year for the Japanese stock market. According to those reports published in the Japanese media. It has been estimated that the market valuation of the company could reach as much as $32 billion in the IPO which could be launched by Toshiba for Kioxia as early as October this year. However, the outbreak of the novel coronavirus pandemic across the world as well as in Japan could impact both the valuation and the timing of the IPO.
Reports also said that Toshiba is being urged by many of its overseas fund investors to do away with its current stake in the second-largest flash memory chip firm of the world since, the investors say, the international market for flash memory chips that are used in smartphones and data storage servers is very volatile as a business venture and any upheaval in the industry could hit the earnings of Toshiba as a conglomerate.
In 2017, Toshiba face a huge bankruptcy crisis related to its nuclear power unit in the United States and the company was forced to sell off 600 billion yen ($5.6 billion) of stock to dozens of foreign hedge funds during the crisis. There has been pressure on the Japanese company since then from activist funds to bring in changes in the company to make it more secure.
Almost 70 per cent of the shareholders of Toshiba are from Japan.

Christopher J. Mitchell

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