Toshiba abandons TV unit to stay afloat

World
Europe

Troubled giant Toshiba is selling its TV business to China’s electronics maker Hisense Group in a 12.9 billion yen (113.4 million US dollars) deal, as the Japanese firm struggles to avoid being consumed by massive losses.

Hisense will acquire a 95 percent stake in fully owned Toshiba Visual Solutions (TVS) Corporation, its TV screen digital display board unit which suffered a loss of 6,137 million yen last year, in a deal expected to close by March 2018, the companies announced in a statement Tuesday.

Should the transaction go as planned the offloading is expected to record a profit of 25 billion yen, turning around forecasts of a 970 million US dollar loss in 2017. This would be a critical upswing for Toshiba as it seeks to restore its balance sheet in compensation for crippling losses as a result of nuclear venture that went bankrupt in the US.

The Vogtle Unit 3 and 4 site, being constructed by primary contactor Westinghouse, a business unit of Toshiba, near Waynesboro, Georgia, US is seen in an aerial photo taken February 2017./ Reuters Photo.‍

Red ink has already forced Toshiba to put many of its divisions up for sale, including selling its prized memory chip unit for 18 billion US dollars, and the transfer of its home appliance business to Chinese counterpart Midea.

Before the offload, Toshiba had already begun to pull the plug on it TV business, pulling out of the North American market in 2015, as it contemplated similar exits in other nations.

“It has become difficult to further invest to strengthen the competitiveness of the visual Products Business,” said Toshiba in a statement, as it named other areas of strategic priority such as energy and electronic devices.

The move is expected to boost Qingdao-based Hisense in its expansion overseas and bolster its supply chain and market share across the globe, Hisense Chairman Liu Hongxin said at a signing ceremony.

Up and coming player Hisense is leveraging the technology of better established TV makers to gain surer footing overseas./ Reuters Photo.

In a bid to gain traction internationally, Hisense, the world’s fourth largest TV maker, in 2015 attained Japanese TV maker Sharp’s brand name and assets in the US for five years, then doubled down by investing another 30 billion US dollars in Sharp’s existing plant in Mexico.

However, the Chinese firm has received complaints and threats of prematurely ending the license for allegedly “cutting corners on quality” and devaluing Sharp’s brand name. In 2016, about 6 percent of the world’s LCD TV sets were sold by Hisense, while Toshiba has failed to claim a position among the top eight players after its overhaul decisions in 2015.