Toshiba has announced plans to sell its television subsidiary to Hisense in a bid to stem severe financial losses.
On Tuesday, the Japanese tech giant said it would sell a 95 percent stake in the unit, Toshiba Visual Solutions (TVS), in a deal worth 12.9 billion yen ($114.4 million) to Hisense Electric.
While Toshiba will retain a small five percent stake, the company says the deal is necessary to “strengthen Toshiba’s financial base,” and following the sale of its appliance business to Midea in 2016, the company wishes to unburden itself of more non-core businesses in order to stay afloat.
“Toshiba positions social infrastructure, energy, electronic devices and digital solutions as mid-term focus business domains and is concentrating its management sources in these domains,” Toshiba said in a statement (.PDF). “In these circumstances, it has become difficult for Toshiba itself to further invest its management resources and execute measures to strengthen the competitiveness of the Visual Products business.”
“Toshiba has accordingly determined the best way to strengthen and increase the corporate value of TVS and to ensure its continued development is to transfer it to Hisense,” the company added.
Under the terms of the deal, Toshiba will continue to lend its branding to products developed by TVS, such as television sets.
Toshiba expects the deal to be finalized by February 2018, pending regulatory approval.
If the sale goes through by March 31, 2018, then the company expects to record a profit of approximately 25 billion yen before tax by eradicating TVS’ negative 11.7 billion yen position on the balance sheet.
While this will have a positive impact on Toshiba’s earnings for the financial year, the firm has made no changes to its forecast, which is currently pegged at a net loss of 110 billion yen($970 million), following the sale of Toshiba’s memory chip business in September.
The business was sold to a Bain-led consortium for two trillion yen in order to make up for losses incurred due to the Westinghouse Electric failure, an acquisition which was aimed at giving Toshiba a strong position in the nuclear energy space.
However, nothing went to plan, with Westinghouse project delays eventually causing a collapse of nuclear schemes in the US and causing Toshiba to suffer a $6.3 billion write-down.
The costly endeavor is still causing Toshiba pain, with the sale of its prized memory-chip business, PC business, the television unit, appliances, and a massive restructure underway.
In February, Toshiba chairman Shigenori Shiga accepted responsibility for Toshiba’s precarious financial position and resigned from his post.