Future of Toshiba NAND business remains cloudy

As I wrote a couple of days ago, Japanese conglomerate Toshiba is considering to spin off its semiconductor business as the company needs money to deal with a major accounting scandal that originated in the company's nuclear business. Toshiba's semiconductor unit includes the lucrative NAND flash memory venture, which generates about 15 percent of the company's revenue.

The semiconductor unit is believed to be worth around $13 billion but Toshiba is not willing to give up majority control. The goal seems to be to sell a stake of 20 percent or a maximum of 30 percent as the company faces writedowns projected to be as high as $6 billion.

Originally, it was believed Western Digital would be an ideal suitor for the NAND flash memory unit because the company already has a partnership with Toshiba in this area, but a deal with WD seems unlikely because Toshiba needs cash before the end of its book-year in March.

As EE Times reports, selling the minority stake to WD would come with a lengthy antitrust review of the deal, which wouldn't allow Toshiba to meet its March deadline. Thus the company is looking at private equity funds, but these might not find the deal attractive enough because they won't get a say in the unit's operations:

To avoid anti-trust concerns, investments by private equity funds might be just what Toshiba needs. However, private equity firms might not find the deal attractive, since Toshiba is offering only a minority stake in its semiconductor spin-off, not the business as a whole. To make the most of this investment, private equity funds would prefer to run the spin-off as efficiently as possible – a goal harder to achieve with a minority stake.

Japanese media reports say that Toshiba could sell 20-30% of its chip business, but it would never give up its majority.

The site reports the ideal solution for Toshiba would be to offload the nuclear operations, but this option gets dismissed because of Toshiba's key role in the cleanup of the Fukushima disaster and the decommissioning of two Toshiba-made reactors, which is expected to take at least 40 years.