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Toshiba sets $6.3 billion share buyback with proceeds of chip unit sale

Reuters  |  TOKYO 

(Reuters) - Corp unveiled a higher-than-expected $6.3 billion stock that sent its shares up as much as 11 percent, as the Japanese firm followed up on a pledge to share proceeds from an $18 billion sale of its memory chip business.

Its announcement on Wednesday that about 700 billion yen ($6.33 billion) of its shares will be repurchased allayed concerns may keep more of its cash, given its uncertain outlook after the disposal of the chip unit and other assets.

had promised to reward shareholders after the sale of the chips unit to a consortium led by U.S. private equity firm closed earlier this month.

Investors, including activist hedge funds, were expected to press the company at its annual shareholders' meeting on June 27 to share the cash raised from the unit's sale.

"The scale of the exceeds what some in the market expected, which was around 600 billion yen. The timing of the announcement is earlier than we had expected, so the first impression is positive," said in a note to clients.

Toshiba shares hit an intra-day high of 351 yen on Wednesday, before erasing some of the gains to be up 6.7 percent at 337 yen.

The company had in recent years cancelled dividend payments and came close to a delisting following an accounting scandal and massive cost overruns at its U.S. nuclear business

It avoided the delisting with a $5.4 billion share issue to overseas investors, including activist funds, late last year.

The company said it was considering dividend payments and the possibility of further moves to bolster shareholder returns.

Toshiba said it will carefully consider the timing and method of the share repurchases but aimed to carry them out as soon as possible.

($1 = 110.6600 yen)

(Reporting by Ritsuko Ando; Editing by Muralikumar Anantharaman)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, June 13 2018. 11:41 IST
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