Toshiba Corp. is in trouble. Again.
This time a kerfuffle at its Westinghouse Electric Co. nuclear-power division is forcing the Japanese industrial conglomerate to spin off its memory-chip businesses, prepping the unit for a sale of a minority stake.
So far, the talk is that such a sale will amount to only 20 percent of the business -- enough to raise some cash, but not so much as to give up control. Toshiba wants to keep its chip cake and eat it, too.
A minority purchase alone doesn't hold much strategic value for an investor, as they'd ride the roller-coaster of a highly unstable memory-chip industry, yet without enough control to affect change or combine operations.
Doubtless there's enough private-equity money out there to find someone willing to roll the dice. And of course existing strategic partner Western Digital Corp. would also be an obvious choice. A WD investment may face antitrust concerns, however, so such a deal isn't assured, Bloomberg News reported, citing a person familiar with the matter.
Chinese investors, though, won't face any antitrust concerns and likely have a far bigger appetite for accepting instability as the price for getting a seat at the table. Lack of strategic access wouldn't be ideal, but this could be seen as a first entree into the market.
Then there's politics. There's a case to be made that a Chinese investment in a non-U.S. company would sail through political opposition more easily than other tie-ups, given the role the Committee on Foreign Investment in the U.S. (CFIUS) plays in scuttling deals. If a hungry Chinese investor buys into that thesis, then they're likely to seize on the rare opportunity to get access to a major name in semiconductors.
For Toshiba, knowing such investors are out there should embolden its executives to seek a higher price from any bidders. This may be a fire sale, but that doesn't mean Toshiba needs to accept low-ball offers.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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