NEC considers sale of its data centers

NEC is reportedly looking at selling its data centers, which could be valued at 59.1 billion to 74 billion Japanese yen (US$400 million to $500 million), as the Japanese technology group continues to streamline its portfolio and to raise cash by selling non-core assets.

Citing anonymous sources who declined to be identified because the discussions are private, Bloomberg reported Thursday that the Tokyo-based company is currently looking to hire financial advisers to help prepare a potential sale of the business.

The sources claimed that other data center operators and infrastructure-focused funds have shown preliminary interest in the assets.

Bloomberg said that NEC is still at the preliminary stage of weighing its options, adding that the formal sale process may not kick off until later this year. Sources told the news outlet that NEC could also decide to retain a minority stake in the business or even keep the assets for longer.

Divesting non-core assets

NEC has been selling non-core assets, including its stake in Japanese chipmaker Renesas Electronics, in the wake of mounting pressure from activist investors, according to the report.

Renesas did not have the financial strength to continue competing with Intel and Taiwan Semiconductor Manufacturing Co. on investment in cutting-edge products. And it was unable to commit to restructuring out of consideration for investors Hitachi, NEC and Mitsubishi.

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In February, NEC sold some of its shares in Japan Aviation Electronics Industry back to the company, cutting its stake to about 34% from 50.8%. The company manufactures connectors used in iPhones.

Hong Kong-based hedge fund Oasis Management filed an injunction to block NEC's sale of its stake in Japan Aviation Electronics, saying the sale would inflict damage on its shareholders. But the request was later dismissed in court.

Meanwhile, NEC shares have more than doubled in price over the past 12 months, valuing the company at about $20 billion.