Fujitsu to Sell All Shares in $1 Billion Air-Conditioning Business

Fujitsu Ltd. is aiming to sell its entire stake in air-conditioning manufacturing unit Fujitsu General Ltd. in order to streamline its operations, its chief executive officer said. The company is not considering a partial divestment.

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Fujitsu, a Japanese IT firm, is shedding non-core operations like its consumer product lineup to focus on communications and information technology systems for businesses. Like Hitachi Ltd. and Toshiba Corp., which saw their fortunes rise during Japan’s postwar economic boom, Fujitsu is streamlining its business to focus on its core strengths.

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This means selling its Fujitsu General shares, which are worth around ¥140 billion ($1.1 billion).
"We have set certain criteria for the sale, and our goal is to sell 100% of the 42% stake," CEO Takahito Tokita said in a recent interview. "We're not interested in doing it half-way."

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Tokita said he was happy to have interested parties, but declined to comment on negotiations over the unit. The unit makes cooling systems for homes and businesses.
Fujitsu is seeing an increase in business from Japanese companies who are adopting more digital workflows to stay competitive. The company is forecasting an operating profit of ¥400 billion for the fiscal year through March 2023, which would represent an increase of 83%. Analysts are projecting an average profit of ¥359 billion for the same period.

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Fujitsu reported quarterly results in October and said it was considering the sale of holdings in non-core affiliates, including Fujitsu General, battery manufacturer FDK Corp. and Shinko Electric Industries Co., which makes packaging materials for semiconductors. According to data compiled by Bloomberg, as of the end of September, Fujitsu held about 59% of FDK and 50% of Shinko Electric.

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Tokita said that discussions about selling Fujitsu's stake in Shinko Electric have been focused on "economic security" and involve close communication with stakeholders, including the Japanese government. He said that these discussions are necessary not only from an economic standpoint, but also from a security standpoint.

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Semiconductors have become a key area of focus for policy makers around the world who are now vying to control key technologies that have military applications. Japan, home to many semiconductor production equipment and materials makers, is under pressure from the US to help prevent chip technology from flowing into China.

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Tokita said that the biggest risks facing Fujitsu are geopolitical strains over Taiwan and surging Covid-19 infections. He said that given the increasing tensions between the US and China, and Fujitsu's high dependence on Taiwan's components including semiconductors, the company has begun scenario planning to maintain supply chains and operations.