Toshiba is considering reducing its stake in its elevator unit amid interest in the business from Finland¡¯s Kone, people with knowledge of the matter said.
The Japanese conglomerate could make a decision soon about whether to proceed with a divestment of part or all of its roughly 80% stake in Toshiba Elevator & Building Systems, the people said. It may first sell a smaller stake in the elevator business before eventually offloading a larger holding, one of the people said.
Finnish elevator maker Kone has spoken with potential advisers about the possibility of increasing its stake in Toshiba Elevator and has held initial discussions with the Japanese group to express its interest, the people said. Kone already owns just under 20% of Toshiba Elevator.
Kone¡¯s class B shares rose as much as 2.6% in Helsinki trading Tuesday. They were up 1.3% at 12:52 p.m. local time, giving the company a market value of about €33 billion ($39 billion).
The interest shows Kone¡¯s appetite for scale and consolidation, Bloomberg Intelligence analysts including Omid Vaziri wrote in a note Tuesday. Any move toward control of Toshiba Elevator would likely be gradual given local ownership sensitivities, they said.
¡°Kone has balance-sheet flexibility to make a sizable deal,¡± they wrote. ¡°Japan offers a dense installed base and an aging fleet driving modernization in a service-heavy market that¡¯s supportive of margin.¡±
Other potential buyers could also be interested in the stake. Deliberations are at an early stage, and there¡¯s no certainty of a deal, according to the people, who asked not be identified because the information is private.
Representatives for Kone and Toshiba declined to comment. A spokesperson for Japan Industrial Partners, the buyout firm that controls Toshiba, also declined to comment.
Kone, founded in 1910 and with more than 60,000 employees globally, reported revenue of €11.2 billion last year. The Helsinki-listed company operates in close to 70 countries, its website shows.
Kone entered a strategic alliance with Toshiba Elevator in 1998. They reached a share purchase agreement in 2001 and Kone has held a stake ever since. Toshiba Elevator¡¯s products are used in the Shanghai World Financial Center, Taipei 101 in Taiwan and Tokyo Skytree.
Kone explored a possible bid last year for former Thyssenkrupp unit TK Elevator, which is now pursuing an initial public offering in Frankfurt.
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