Toshiba Soars on Optimism for Sale of Memory Chip DivisionBy
Shares climb by 22 percent amid heavy trading turnover
Short interest this week rose to the highest since June
Toshiba Corp. jumped the most on record on optimism the company will be able sell its memory chip division and survive the crisis caused by a writedown at its nuclear business.
Shares soared 22 percent, the most on record, according to data compiled by Bloomberg going back to 1974. Volume on Wednesday was three times the 30-day average.
This week, the Tokyo-based company completed the sale of its medical finance unit. Media reports said a buyer of its prized flash memory business could be chosen in May, and that Taiwan Semiconductor Manufacturing Co. could be a bidder. The company is said to be looking to raise at least 1 trillion yen ($8.8 billion) from the sale of its memory chip unit as it grapples with a $6.3 billion writedown at its nuclear division.
Toshiba declined to comment on the share price movement. A spokeswoman for TSMC didn’t comment on market rumors about its reported interest in Toshiba’s chip operations.
The cost to insure Toshiba’s bonds against non-payment fell 45 basis points to 443 basis points, according to data compiled by Bloomberg.
The run of positive news comes after increased bets the stock would fall, with short-selling reaching 8.1 percent of outstanding shares on Monday, the highest since June, according to the latest available data from Markit. That makes it more vulnerable to sharp upswings when sentiment shifts, driving a stampede to close positions.
“Borrow was getting tight on Toshiba,” said Amir Anvarzadeh, Singapore-based head of Japanese equity sales at BGC Partners. “That was a really big warning sign that anything could trigger panic buying that would lead to a massive squeeze.”
Toshiba’s nuclear division is suffering massive cost overruns in the construction of power plants in the U.S. and China. Local media have reported this week that buyers ranging from Apple Inc. to Microsoft Corp. may be interested in the chip unit.
TSMC, the biggest contract maker of chips, may aim to boost cooperation with Toshiba by investing in its memory business, the Nikkan Kogyo newspaper reported Wednesday. On Monday, the head of Japan’s business lobby Keidanren said Toshiba’s technology was a matter of national interest, according to the Nikkei.