Toshiba Corp is planning to phase out its 40.2 percent stake in Kioxia Holdings after the world’s second-largest flash memory chip company revealed its plan to list its IPO shares on the Tokyo Stock Exchange in October this year.
Toshiba is most likely to sell its holding stake after the float. Kioxia, earlier called Toshiba Memory, is considering to distribute about half or more of the after-tax proceeds acquired from the sale to its shareholders.
Today, Toshiba said in a filing with the Tokyo stock exchange that it was considering various possibilities for shareholder returns, such as asset handling and portfolio review.
With an expected market value of $32 billion, Kioxia’s is expected to be the biggest listing of the year for Japan, which would yield a big return for Toshiba. In a quest to create a stable earnings structure resilient to economic swings, Toshiba is focusing on operations around infrastructure services. Offloading Kioxia’s shares appear to be part of that push.
“Many overseas fund investors are urging Toshiba to sell the stake on the grounds that flash memory chips, used in smartphones and data storage servers, are a highly volatile business that could sway Toshiba’s earnings,” the source said.
Toshiba was under pressure from activist funds demanding change since the company sold $5.6 billion of stock to dozens of foreign hedge funds during a 2017 U.S. nuclear power unit bankruptcy crisis. Nearly 70 percent are non-Japanese shareholders.
They had announced on Friday that Yoshimitsu Kobayashi would retire as chairman of the board and the company is moving to nominate the replacement for Osamu Nagayama, Honorary Chairman at Chugai Pharmaceutical.
After Samsung Electronics, Kioxia is the world’s second-biggest producer of NAND flash memory, used in a range of products from smartphones to self-driving cars. In 2018, Toshiba spun off its memory business after a ruinous accounting fiasco and financial problems at Westinghouse Electric, a former U.S. nuclear affiliate.