(Bloomberg) — A potential sale of Toshiba Corp.’s elevator business has attracted preliminary interest from industry players including Chinese conglomerate Midea Group Co. and U.S. giant Otis Worldwide Corp., people familiar with the matter said.
Kone Oyj, which owns 19.9% of Toshiba’s elevator unit, is interested in acquiring the rest of the operation, the people said. TK Elevator GmbH, the German company owned by buyout firms Advent International and Cinven, would also be a suitor if Toshiba goes ahead with a sale, according to the people, who asked not to be identified because the matter is private.
Toshiba’s elevator business could fetch about $4 billion in a sale, the people said. Considerations are at an early stage and Toshiba hasn’t kicked off any formal sale process, they said. Shareholders will vote Thursday on Toshiba’s plan to split into two companies and sell non-core assets including the elevator operations.
The Japanese conglomerate and Kone have been collaborating in areas including the supply and procurement of parts since 1998. The partnership could give the Finnish company an edge over other potential rivals, the people said.
Shares in Toshiba rose as much as 3% and touched a three-week high in early Wednesday trading in Tokyo.
Mounting Opposition
Toshiba aims to reach a final agreement by March 2023, its representative said in response to Bloomberg queries. A spokesperson for Kone said it follows the business and developments around it closely, without commenting further.
A spokesperson for Otis said the company explores potential opportunities when appropriate and is aware of Toshiba’s announcement, declining to comment on specific transactions. A representative for Midea didn’t immediately respond to requests for comment, while Advent and Cinven declined to comment.
Toshiba in February announced it would split into two companies and sell non-core assets, scrapping an initial three-way split that faced fierce criticism from activist shareholders. It now plans to spin off its devices business, which includes semiconductors, and sell non-core operations in areas from air conditioning to elevators and lighting.
The proposal to split into two companies is also facing mounting opposition from proxy advisory firms such as Glass Lewis & Co. and Institutional Shareholder Services Inc., which have urged investors to vote against it. Separately, activist investor 3D Investment Partners Pte has asked Toshiba to launch a new strategic review to explore other options, including the sale of the company.
Toshiba, once among Japan’s most revered companies, has been in crisis mode for years due to repeated scandals and management missteps. It invented flash memory for computing, but had to sell control of its crown jewel semiconductor business to pay for a disastrous expansion in nuclear power.
(Adds Toshiba’s shares move in fifth paragraph.)
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