Toshiba has agreed to sell its image sensor business assets to Sony in the wake of an accounting scandal which left investors reeling.
The Tokyo, Japan-based firm said on Wednesday that it has entered into a non-binding agreement with Sony to let go of the business, as well as a variety of other equipment and assets in Oita Prefecture.
As part of the agreement, Sony will take on the image sensor manufacturing facility in Oita, south Japan, as well as Toshiba's 1,1000 engineering and design staff at the plant. Once the transfer is complete, Sony plans to give control of the plant to Sony Semiconductor Corporation, a subsidiary of the electronics giant.
The factor will primarily be used to manufacture CMOS image sensors, which are used in a variety of technological applications.
While financial details were not disclosed, sources familiar with the matter told the Reuters news agency that the deal is worth approximately 20 billion yen ($166.15 million).
Toshiba says the move will help the company "devote its resources to products where it has a high technological advantage," but the recent admissions by the firm concerning its accounting practices is likely to have come into play.
Last month, the company admitted it had overstated its profits by almost $2 billion over the past seven years. Aggressive profit targets left department staff inflating results to meet these requirements and shareholders reeling as the news broke -- unsurprisingly sending shares plummeting.
If Toshiba is going to recover, the company needs to embark on a restructuring effort which may include the sale of unprofitable assets or those facing rising competition -- such as the image sensor business.
When it comes to Sony, purchasing the assets will further strengthen the firm's position as a strong player in the image sensor industry.
The deal is expected to close within the fiscal year ending March 31, 2016.
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