Hisense of China has done a deal with Toshiba to buy the TV business, in the form of Toshiba Visual Solutions Corporation. Hisense will buy 95% of the organisation, which has 700 employees, for ¥12.9 billion ($115m) and Toshiba will retain 5%. The company will have a licence to use the Toshiba brand for forty years in “Europe, South East Asia and other markets”. As well as the market rights, Hisense will get two factories in Japan and a substantial range of ip in image quality and acoustics.
The companies hope to complete the deal by February 2018.
Analyst Comment
This deal makes a lot of sense. Toshiba is still scrambling to save its business (Toshiba Position Goes From Bad to Worse and Bain Consortium Acquires Toshiba Memory Corporation) so any cash should be welcome as the deal is still in dispute because of complaints from Western Digital.
First, as soon as I heard the news, I wondered about the deal that Toshiba had with Vestel of Turkey, which has been licensing the brand name in Europe (Vestel Wins Toshiba Brand for TV in Europe). Turkish sources said that there had been a competition between Vestel and Hisense for the Toshiba brand, which is reported to have sold 700,000 TVs in the last year. It seems that Vestel either didn’t bid, or offered less than Hisense.
The situation is also not entirely clear in the US, where the Toshiba brand is licensed by Compal for TVs. My own expectation is that Hisense would want to add the licence for the US, but, like the deal in Europe, the original licence was for two years (and, no doubt the issues with Sharp in the US are one reason why the new deal is for 40 years!)
Hisense, of course, is in dispute with Sharp/Foxconn in the US. Once Foxconn took over Sharp, it wanted to get the brand back, but Hisense has not been keen to do this. Sharp has taken legal action against Hisense in the US. (Sharp & Hisense)
Just as we went to press, we also heard that Nikkei has reported that Toshiba is in the process of selling its PC business to Asustech (Asus), although Lenovo is also said to have been interested in the business and that might complicate things, although Lenovo has already acquired the PC businesses of NEC and Fujitsu that are both significant in Japan. Toshiba is reported to be selling around 1.8 million PCs per year., but is operating at a loss that is forecast to be increasing.
Toshiba quickly responded by saying that it hasn’t decided to sell its PC business and that it is not in negotiations with any individual company. (atlhough it didn’t say that it’s advisers were not in such talks!).
It looks as though it will take another year or two for the full ramifications of Toshiba’s troubles to fully play out. (BR)
