Toshiba announces memory arm spin-off plan

January 30, 2017 | 11:20

Tags: #acquisition #financial #merger #semiconductor #spin-off

Companies: #ocz #toshiba #western-digital

Toshiba has confirmed that it is to spin off its memory business with a chunk to be purchased by an as-yet unnamed buyer believed to be storage giant Western Digital.

Not that long ago, Toshiba was investing heavily in the solid-state storage market: When OCZ filed for bankruptcy in 2013, Toshiba purchased the company for $35 million before relaunching the brand as OCZ Storage Solutions in early 2014. Despite reasonable commercial success for both OCZ and Toshiba-branded drives, plus technological breakthroughs courtesy of its partnership with SanDisk, things haven't been going smoothly since. In 2015 executives abandoned the company in the face of an accounting scandal which led to a $39.5 million fine from the Japanese Securities and Exchange Surveillance Commission, while an attempt at breaking into the North American nuclear power market last year has ended in a major loss.

The result: The rumour that Toshiba was to spin off its semiconductor arm with Western Digital tipped as taking a slice in order to improve Toshiba's cash flow. While Toshiba confirmed at the time that it was investigating a spin-off, it said nothing had been decided; today, though, that decision has been made and a spin-off is indeed in the works.

In a statement (PDF warning), Toshiba confirmed that it would be spinning off its memory division - including the solid-state storage arm, but keeping its image sensor business in-house, and that 'the Company [Toshiba] is considering an injection of third-party capital as a financial measure.' That injection would come as a sale of a chunk of the newly formed company, with Western Digital - which has remained silent on its involvement - seeming favourite to take the slice.

Toshiba has called for an extraordinary meeting of shareholders to discuss the plan, with a view to beginning the spin-off process by the end of March.
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