Toshiba’s net profit expected to zoom on planned sale of its NAND memory business

Toshiba’s sale of its memory business hinges on getting regulatory approval from Chinese authorities by May 31, 2018.

 

Toshiba Corp stated, it expects a 33% rise in net income thanks to proceeds from its planned $18 billion sale of its NAND memory chip business to a consortium led by Bain Capital.

Toshiba’s net profit, which has been struggling for the last couple of years, is likely to grow to $9.75 billion (1.07 trillion yen) from 804 billion yen.

Although Toshiba has approved the planned sale of its memory chip business to a consortium led by Bain Capital and South Korea’s SK Hynix Inc, the deal could catch fire if it is not approved by Chinese regulators by this month; it may then have to drop the sale in favor of other options.

As per sources, Toshiba is worried that the deal could face hurdles stemming from trade frictions between the United States and China, although they are not able to quantify the impact of such a friction.

For Toshiba, if it does not receive approval from Chinese regulators, it can walk away from the deal since it is no longer desperate for cash after the issuance of new share issue to foreign investors worth $5.4 billion in 2017.

Some activist shareholders have opposed the deal arguing it significantly undervalues its NAND memory business.

On Tuesday. Toshiba stated, it plans on sticking to the deal and will return the cash generated to shareholders, once the sale goes through.

Toshiba expects to 970 billion yen in profit from the sale.

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