Toshiba Sells PC Business to Sharp

The deal signals Sharp’s reentry into PCs, a business it abandoned in 2010.
William SprouseJune 5, 2018
Toshiba Sells PC Business to Sharp

Toshiba has agreed to sell Toshiba Client Solutions, its personal PC business, to Sharp in a deal valued at about 4 billion yen ($36 million). The move signals a return to the PC business by Sharp, which closed down its PC unit in 2010 due to poor earnings and intense competition.

Under the terms of the deal, Toshiba said will transfer 80.1% of TCS to Sharp. After the transfer is closed, TCS will be deconsolidated, the company said.

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In conjunction with the transaction announcement, Sharp said it would issue $1.8 billion in new shares and use the proceeds to buy back preferred stock that it sold to banks in return for a financial bailout. It said it was doing so to reduce high-interest payments.

The Toshiba deal is expected to close October 1, 2018.

SharpAnalysts say Sharp will be able to use the scale of its parent company, Foxconn, to produce PCs inexpensively, as it has done with televisions.

“Foxconn is a PC contract manufacturer and has a great deal of expertise and production capacity,” said Hiromi Yamaguchi, senior analyst at Euromonitor International.

“This acquisition will prove a further catalyst for more Sharp and Foxconn synergies.”

Toshiba sold the first laptop PC in 1985. In 2011, at its peak, it sold 17.7 million PCs, but sales dwindled to 1.4 million units last year.

Toshiba struggled following its failed acquisition of Westinghouse Electric, which it sold last year. It took a $6.3 billion write- down after Westinghouse’s nuclear energy division declared bankruptcy. Toshiba transferred the PC business to TCS on April 1, 2016, as part of a broad restructuring.

TCS then refocused on B2B activity and explored strategic options. It sold its chip business, Toshiba Memory, to a consortium led by Bain Capital for $18 billion last fall.

Toshiba said it expects to report a loss on the TCS sale of roughly $15.5 million.

The company said it will continue to offer brand licensing for PC products and equipment after the transfer.

Sharp recently posted its first annual net profit in four years.