Japan’s NEC contemplates sale of data centers for $500 Million

While these considerations are still in the preliminary stages, a formal sale process may not commence until later this year. Additionally, NEC may opt to retain a minority stake in the business or prolong the holding of the assets, as stated by the sources.

Media reports have revealed that Japanese technology giant NEC is weighing the sale of its data centers as part of a strategic move to streamline its portfolio and generate cash through divesting non-core assets.

The Tokyo-based company is reportedly in the process of considering financial advisers to assist in preparing for the potential sale of its data center business. Valued between $400 million to $500 million (¥59.1 billion to ¥74 billion), the assets have attracted preliminary interest from other data center operators and infrastructure-focused funds, according to the sources, who preferred anonymity due to the private nature of the discussions.

While these considerations are still in the preliminary stages, a formal sale process may not commence until later this year. Additionally, NEC may opt to retain a minority stake in the business or prolong the holding of the assets, as stated by the sources.

Established in 1899, NEC specializes in information technology and network communications, biometric recognition, the internet of things, and artificial intelligence technologies, as outlined on its website.

NEC’s shares have seen a significant surge, more than doubling in the past 12 months, leading to a valuation of approximately $20 billion. In response to pressure from activist investors, the company has been actively divesting non-core assets, including its stake in Japanese chipmaker Renesas Electronics.

In February, NEC reduced its ownership in Japan Aviation Electronics Industry by selling some of its shares back to the company, resulting in a decrease from 50.8% to about 34%. Although Oasis Management sought an injunction to halt the share buyback, the court dismissed the request later on.