Toshiba Climbs After Reports Its Chip Business Drawing Interest

  • Tokyo-traded shares rise the most in more than three weeks
  • Memory chips may be spun off to cover nuclear unit writedown

Toshiba Corp. shares climbed the most in three weeks after reports that the company’s plan to sell a stake in its chip unit is drawing attention from possible investors.

The stock climbed as much as 7.3 percent to 264.8 yen in Tokyo, the biggest intraday gain since Dec. 30. Toshiba may sell a 20 percent stake in its memory chip operations to raise as much as 200 billion yen ($1.8 billion) and has received interest from Canon Inc. and Tokyo Electron Ltd. as well as overseas private equity funds, the Asahi reported, without citing anyone.

Monday’s rally has pared the share decline in the past month to 43 percent after Toshiba surprised investors in December with news that writedowns at its nuclear business could run into the billions of dollars. The company has said it is considering spinning off the chip business. The Tokyo-based conglomerate has already gone through a round of asset sales in the wake of a profit-padding scandal in 2015 that led to record losses, staff cuts and prompted the company’s top management to resign.

“Considering the time constraint under which the company is operating, the chip unit spinoff seems like the most realistic option,” Mikio Hirakawa and Simon Woo, analysts at Bank of America Merrill Lynch wrote in a report on Friday.

Private equity firms Bain Capital LP and Permira may be interested in purchasing a stake, which could be as much as 30 percent, Kyodo News reported, citing people it didn’t identify. Western Digital Corp., which whom Toshiba has shared investments, is also interested, according to Nikkei.