Toshiba shares jumped more than 22 per cent on Tuesday as investors digested a series of developments influencing the planned sale of its prized memory chip business.
Late on Friday, the Superior Court of San Francisco delayed a ruling on Western Digital’s attempt to block the $18bn sale and proposed an order requiring Toshiba to give the US chipmaker, a joint venture partner for a number of manufacturing facilities, two week’s notice before completing a sale of the chip business.
Toshiba is desperate to close the sale in an effort to plug a ¥600bn ($5.3bn) hole in its shareholder equity and prevent being forcefully delisted from the Tokyo Stock Exchange.
With the next court case hearing slated for July 28, Toshiba acknowledged in a statement today “there is no chance of closing the deal withing the next two weeks”.
The company added that in the meantime it “can and will continue to negotiate and sign an agreement with bidders for the deal.”
Earlier this month, fears grew Toshiba could not agree a deal with its preferred consortium of bidders, led by government backed Innovation Corporation of Japan (INCJ) and US private equity group Bain Capital.
Ambitions by SK Hynix, also part of the group, to secure an equity stake rather than just provide debt funding, was seen as politically fraught. Toshiyuku Shiga, INCJ’s chairman, told media last Friday the fund would not sign the deal to buy Toshiba’s memory chip unit if the South Korean chipmaker demanded voting rights.
SK Hynix has now reportedly dropped its demand for those rights.
Toshiba shares closed 19 per cent higher on Tuesday as investors in Tokyo returned from a long weekend. The stock was at one point up by 22.2 per cent.