Sharp is buying Toshiba's PC unit and is getting back into the computing business after eight years away.
According to Reuters, Toshiba has sold its PC business to Japanese manufacturer Sharp for $1.8 billion in new shares, to buy back preferred stock from banks. Sharp will take an 80.1 per cent stake in the new business, starting October 1 this year.
Sharp's parent company is Foxconn, a company that produces electronic parts. Jointly, they managed to produce cheaper TVs, and the media are speculating Sharp might do the same with PCs, now that it had acquired Toshiba.
According to Reuters, Sharp was buying back preferred shares to reduce high interest payments. Even though this will result in a dilution of 10 per cent and higher, analysts believe dilution could have been better had the preferred shares been converted into regular stock first.
Toshiba has been in financial ruin ever since the bankruptcy of its nuclear unit, Westinghouse. It managed to sell the unit for $4.6 billion, but still failed to make up for the losses.
It then announced it would be selling its chip unit, and after a couple of months of back-and-forth, finally managed to close the deal with Bain Capital last month.
Image Credit: Toshiba