LOS ANGELES: Hitachi Ltd is planning an initial public offering of its hard-drive unit in the United States, possibly by year's end, sources familiar with the situation said.

Bankers are in discussions with the Japanese company about an IPO and underwriters could be named in early September, the sources said. Unofficially, Goldman Sachs Group Inc has been chosen as one of the underwriters, they said.

The hard-drive unit, Hitachi Global Storage Technologies (HGST), is the world's No. 3 hard drive maker and analysts said it could be valued at about $3 billion.

Although an IPO is the most likely scenario, Hitachi is also considering a sale of all or part of HGST, several sources said.

Banks gave presentations earlier this month to HGST in San Jose, California, where the unit is based, one source said. Another said bank teams had also traveled to Japan.

Last month, in an unusual move not tied to any event except the end of a financial quarter for HGST, Hitachi emailed analysts and fund managers an investor package highlighting the strengths of the unit.

Analysts said Hitachi may be looking to an IPO or sale to generate cash.

A sale might be a more attractive option, given the struggling U.S. IPO market and a sudden surge in tech-related M&A activity. Bankers have said more companies are now pursuing both options simultaneously.

"An independent business structure is ideal for a business like this one where price volatility is so severe and there is the need for such big capital investment," said a Hitachi executive who declined to be named.

A Tokyo-based Hitachi spokesman said: "We have not made any decision on the future (of HGST). Our stance from before – that we have been exploring various possibilities for the direction of the business – has not changed."

The company declined to comment further.

Hitachi moved to raise about $4.5 billion last year to shore up its battered capital base by issuing new shares and convertible bonds, its first public offering in 27 years.

The company, on track for its first annual net profit in five years, has boosted investment in infrastructure-related areas such as power and industrial systems.

Some analysts have said hard drive manufacturing may fall outside that mandate and shedding the business could help the company's overall finances.

"They are sort of cash-strapped, so this would get money to the firm, it would help them financially," said Hemant Hebbar, an analyst with Wedbush Securities.

Wedbush said in a research note on Aug. 3 that "Hitachi might be planning to spin out HGST through an IPO within the next two years."