Now the immediate future of Toshiba has been secured through the $18bn sale of the NAND business, the company must scale down operations to become sufficiently nimble and competitive enough to become prosperous again. With all the large profitable sections sold or bankrupt, Toshiba now mainly exists as a collection of firms which are low-growth and unlikely to yield consistent profits. To solve this problem the company must sell or close the worst performers and use any funds raised to help the company expand again. If this course of action is not taken the danger is Toshiba will become a ‘zombie’ company.
Given the problems surrounding the sale, the final deal was surprisingly close to the ambitions held by the Japanese government at the beginning of negotiations. Intent on keeping the business in Japan, the government caused various business problems by introducing politics to proceedings. However, more than half the company will remain in Japanese hands, as will nearly all the control of day-to-day operations. For the time being, funds from the sale should keep the company listed on the Tokyo Stock Exchange and creditors happy. Given the circumstances, the decision to sell to the Bain Capital led consortium was the best compromise deal.
Now the sale has been agreed, the new owners are moving fast to secure the future of the business. Antitrust approval is required around the world. Whilst this should not be much a problem in Japan, Europe and the US, China could prove problematic given the involvement of South Korean SK Hynix. Toshiba is safe at present but if approval cannot be gained before the end of the financial year, the company would become reliant upon the goodwill of creditors to carry on.