Toshiba Subsidiary Acquires IBM's Point-of-Sale Business Unit for $850 Million

By Beecher Tuttle April 17, 2012

Toshiba Tec, a business unit of Japanese electronics giant Toshiba, has agreed to purchase IBM’s Retail Store Solutions business to complement its own point-of-sale (POS) product portfolio.

Under the terms of the transaction, Toshiba Tec will acquire IBM’s POS terminal operations and assets for an all-cash sum of around $850 million using its own surplus and a series of banks loans, according to the Wall Street Journal.

Toshiba Tec maintains a strong presence in the Asian Pacific markets – selling scanners, barcode readers and other hardware for transactions processing and inventory management – but has yet to make a big splash in Western markets. IBM’s business unit commands as much as 25 percent of the global POS terminal market, says the Journal.

On the surface, the deal seems to make sense for both parties. Toshiba Tec can expand its operations westward by gaining access to IBM’s global client base, headlined by retail behemoths like Wal-Mart and Toys R Us. IBM’s Retail Store Solutions business generated revenues of more than $1.1 billion last year. The Toshiba subsidiary will also sign a multi-year agreement with IBM to become one of the company’s premier business partners.

“It will have a major impact for Toshiba Tec,” Hideki Yasuda, an analyst at Ace Securities Co. in Tokyo, told Bloomberg. “Toshiba Tec will be able to expand its POS business with the acquisition, as IBM already has customers and can lure new ones with its brand.”

In return, IBM will receive a lump cash sum that will enable the company to dedicate more resources to its software and cloud computing push. 

The transaction is expected to close at the end of the second quarter. In an effort to promote a smooth transfer, IBM and Toshiba Tec will create a holding company that will manage the new business for a short period. Toshiba Tec will maintain and 80.1 percent stake in the holding company for three years, at which time it will purchase IBM’s remaining 19.9 percent equity interest.

Edited by Jennifer Russell

TechZone360 Contributor

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