Toshiba in late-stage talks to sell white goods business to China’s Midea Group

Troubled Japanese electronics manufacturer Toshiba Corp is in late-stage talks to sell its white goods business to Chinese household appliance company Midea Group Co Ltd, Japanese business daily Nikkei yesterday reported.

The sale of Toshiba Lifestyle Products & Services is expected to fetch tens of billions of yen, the report said.

The move comes a few days after Canon Inc gained exclusive negotiating rights for Toshiba Corp's medical equipment unit. Canon's offer in the second round was more than 700 billion yen ($6.2 billion) (See: Canon close to buying Toshiba's medical equipment unit)

Innovation Network Corp of Japan, a government-backed investment fund, had earlier mulled merging Toshiba and Sharp Corp white-goods business, but the plan fell apart last month after Taiwan's Foxconn Technology Group agreed to take control of Sharp entire business.

Toshiba president Masashi Muromachi last month said that the company might sell its unprofitable white-goods businesses to a foreign competitor in light of Sharp's latest developments.

Decades ago, the white goods industry spearheaded Japan's economy, but Japanese companies are now struggling amid global competition and a shrinking domestic market.

In 2012, Sanyo Electric Co., a subsidiary of Panasonic Corp, sold its refrigerator and washing machine businesses to China's Haier Group.

Toshiba and Midea already have a technological cooperation agreement and an air conditioning joint venture, which would make the merger easier. The Toshiba deal will allow Midea to enter into the Japanese market with a full range of white-good products.

Founded in 1968, Midea is China's largest white-goods manufacturer and the world's second-biggest by sales and posted revenues of $23 billion in 2014.  

Toshiba, which developed Japan's first electric washing machine in 1930, is recently recovering from a $1.2-billion accounting scandal that forced the company to restate earnings for more than six years.

Top executives of the company had set unrealistic profit targets that systematically led to flawed accounting. An investigation had found that accounting irregularities were ''skillfully'' hidden from outside observers.

The Tokyo-based company sold its image sensor business to Sony Corp, its 4.6-per cent stake in Finnish elevator maker Kone Oyj for $946 million, and has also started the process of selling part of its loss making chip business as part of its restructuring plan.