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A buyout of Toshiba, which has a market capitalization of almost $18 billion, would possibly be private equity’s biggest ever deal in the country.
A consortium led by U.S. private equity firm Bain Capital last year won a long and highly contentious battle for the unit, which Toshiba put up for sale after billions of dollars in cost overruns at its Westinghouse nuclear unit plunged it into crisis.
Even if the deal did not close by then, it would close "at some point in April, May or June," Naruke said during his visit to a new chip R&D centre in central Japan.
The IPO is one of various contingency plans being looked at by Toshiba's top executives, the FT said, citing people familiar with the plans. It added that some analysts and Toshiba shareholders favour it over the existing deal.
Toshiba agreed in late September to sell Toshiba Memory, the world's second-biggest producer of NAND chips, to a consortium led by Bain Capital LP for $18 billion to cover billions of dollars in liabilities arising from Toshiba's now bankrupt U.S. nuclear power unit Westinghouse.
Toshiba's board has approved a framework for a settlement and is aiming to reach a final agreement by next week, one of the sources said.
Under an agreement, Western Digital will drop efforts to block the Japanese company's $18 billion sale of its flash-memory business in exchange for the extension of their joint venture agreements, Bloomberg reported, citing people familiar with the matter.
The move, decided at a board meeting on Sunday, will allow Toshiba to pay off billions of dollars in liabilities at its bankrupt U.S. nuclear power business, Westinghouse. That in turn gives it the funds to return to positive net worth by the end of the financial year in March, as an $18 billion sale of its prized memory chip unit is unlikely to close before then.
The statement came after Yomiuri newspaper reported that the cash-strapped conglomerate was considering a capital increase for the subsidiary, Toshiba Memory, with the investment coming from a member of the Bain-led group.
The Japanese conglomerate has received proposals from several domestic and overseas brokerages for plans to raise money through a public offering or third-party allotment, and is looking into the option of allocating shares mainly to overseas investors, the person said.
The sale, which still needs to clear antitrust reviews, needs to close by the end of the financial year in March or it will likely report negative net worth, or liabilities exceeding assets, for a second year running. If it does, that could trigger an automatic delisting from the Tokyo Stock Exchange.
Toshiba, which separated out the unit in April as a prelude to a sale, said it was being taxed on the basis of assets and liabilities of the transferred business at the time of the split.
Toshiba's board agreed last week to sell the unit, the world's second biggest producer of NAND chips, to the Bain group. However, the signing was delayed because consortium member Apple Inc demanded new terms on chip supply in return for funding, sources familiar with the matter have said.
In a last-minute twist to a long and highly contentious auction, Toshiba said in a late-night announcement through the exchange it agreed to sign a contract for the deal worth about 2 trillion yen ($18 billion).
Toshiba said this week it has agreed to focus on selling the world's No. 2 NAND producer to a group led by Bain and South Korean chipmaker SK Hynix Inc but it did not rule out a deal with other suitors including Western Digital.
The announcement came after sources told Reuters on Tuesday that Toshiba was now favouring the Bain group after failing to bridge disagreements with rival suitor Western Digital Corp.
Earlier on Tuesday, the Nikkan Kogyo business daily reported without citing sources that Toshiba has agreed to sell the business to a consortium led by U.S. chipmaking partner Western Digital Corp for about 2 trillion yen ($18.3 billion).
A group including Western Digital, U.S. private equity firm KKR & Co and Japanese government investors are offering around 1.9 trillion yen ($17.3 billion) for the unit, separate sources previously told Reuters. The U.S. firm is offering 150 billion yen through convertible bonds, they said.
The conglomerate hopes auctioning its chip unit will help it pay debt and cover the impact of $6.3 billion in liabilities linked to Westinghouse, but talks on the sale have stalled.
PriceWaterhouseCoopers Aarata LLC (PwC) gave a "qualified opinion" on Toshiba's results for the year ended March as well as for April-June, according to a filing. That means the auditor broadly vouched for Toshiba's book-keeping.
PricewaterhouseCoopers Aarata LLC will give a "qualified opinion" endorsing Toshiba's finances in the financial statement for the year ended in March, people with direct knowledge of the discussions told Reuters on Tuesday.
The Japanese company said it has increased the initial amount of capital investment in the Fab 6 production line to 195 billion yen ($1.76 billion), up by 15 billion yen from its original estimate, because it is now going it alone.
Toshiba said in a statement that it was seeking a permanent injunction and 120 billion yen (USD 1.1 billion) in damages for what it called interference in the effort to sell Toshiba Memory Corp.
The ailing Japanese conglomerate is rushing to sell the prized unit to cover billions of dollars in cost overruns at its bankrupt Westinghouse nuclear unit. It had promised to sign a definitive agreement with a preferred bidder by Wednesday's meeting.
Taiwan's Foxconn will continue to pursue an acquisition of Toshiba Corp's chip business, a day after the troubled conglomerate chose a rival suitor as the preferred bidder, the head of Foxconn's Japanese unit said.
