Toshiba Corp. (TOSYY) shares surged the most in four months in Tokyo trading Wednesday after domestic media reports that Western Digital (WDC) - Get Report has offered nearly $18 billion for the troubled conglomerate's flash-memory division.

The Kyodo news agency said Western Digital CEO Steve Milligan would meet with Toshbia's President, Satoshi Tsunakawa, later Wednesday to discuss the sale as the groups attempt to iron out differences linked to a SanDisk joint venture that Western Digital alleged was moved into a separate memory unit business in order to be sold more quickly.

Toshiba is attempting to sell its lucrative chip business in order to cover costs associated with the collapse of its U.S nuclear division, Westinghouse, and its subsequent Chapter 11 bankruptcy filing, but the process has been hampered by delays linked to the company's financial statements and a request by Western Digital to the International Court of Arbitration to block the sale.

Toshiba shares rose more than 8.3% in Tokyo trading, the biggest gain since Jan. 23, to end the session at ¥251.5 each. The shares, however, have plunged more than 50% since details of overruns at projects run by Westinghouse were first revealed in mid December.

Toshiba has warned that it could collapse if it doesn't sell the newly created Toshiba Memory operations and plug a gaping hole in its finances. The auction has attracted significant interest, including from Western Digital, though the U.S company is not considered to be a frontrunner.

The size of Toshiba's financial hole was confirmed earlier this month when it published unofficial results for the fiscal year ending March, revealing the largest ever net loss by a Japanese industrial group.

The ¥950 billion net loss was twice as large as the ¥460 billion Toshiba tallied over the previous year, after the company booked massive losses from its bankrupt U.S. nuclear unit Westinghouse Electric. Toshiba said it expects to return to profit during the year to the end of March 2018 with a profit of ¥50 billion.

Toshiba has repeatedly delayed publishing its financial results as it has been unable to secure approval from auditors. Monday's figures remained unaudited, forcing Toshiba to label the results as projections.

Read More Trending Articles: