Toshiba to sell chip unit to Japan-US-South Korea group

21 September, 2017, 01:02 | Author: Gladys Mathis
  • Toshiba said to have selected Bain-SK Hynix group to buy its memory business

Turning its back on a proposed deal led by Western Digital, Toshiba is set to make around $22 billion from the sale.

The Bain-led group was identified as a preferred bidder nearly three months ago, but the process has been delayed by the lawsuits, government opposition and corporate indecision.

The arrangement was ultimately preferred to bids by KKR & Co. and two state-backed Japanese entities.

The reports also said Western Digital had made key concessions to assure the Japanese firm that it would not seek future control of the chip business. It has opposed the sale of Toshiba's chip business from the very beginning, arguing that the business segment includes joint venture agreements that can not be sold off without Western Digital's approval.

Sources speaking with Bloomberg say Western Digital is still pursuing legal action over claims it should have some say in who buys the division. A Western Digital spokesman declined comment. The joint ventures are worth less than 5% of the chips unit, the person said. Bain may be American, but the group it leads includes Japanese companies.

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The race for acquiring the Toshiba unit intensified recently as the Bain-SK Hynix alliance raised its offer to 2.4 trillion yen, higher than the initial offer of 1.94 trillion yen, after WD raised its own offer from the initial 1.9 trillion yen. The special goal entity making the acquisition will be called Pangea and receive about 600 billion yen in loans, the person said.

The deal, agreed to by Toshiba's board of directors at a meeting Wednesday (Sept. 20), came just hours after the Retuers news service, citing anonymous sources, reported that Toshiba was once again leaning toward accepting a rival bid from Western Digital.

The auction has gone through dizzying twists and turns.

A week ago Patently Apple posted a report titled "Toshiba Signs Memorandum of Understanding with Bain Capital's Consortium for Toshiba Memory Corporation". But the MOU didn't preclude Toshiba from continuing to negotiate with other bidders.

Bain Group revised its offer, by seeking financial support from Apple.


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