Toshiba decides to sell chip unit to Bain-led team

September 20, 2017

TOKYO- Troubled Japanese electronics and machinery giant Toshiba Corp. decided at a board meeting Wednesday to sell its prized flash memory unit to a Japanese-US-South Korean consortium led by US private equity fund Bain Capital, informed sources said.

Toshiba plans to conclude a deal on the sale of the unit, Toshiba Memory Corp., within the day and make an announcement later, according to the sources.

The consortium has put forward an acquisition offer of some 2.4 trillion yen, including funds for equipment investment.

Toshiba was also in talks with hard disk drive maker Western Digital Corp., its US flash memory business partner. But the two companies apparently failed to reach an agreement as they remained apart over the US firm's future involvement in Toshiba Memory's management if it wins the bidding race.

Toshiba and the Bain-led consortium on Sept. 13 signed a memorandum of understanding to speed up their negotiations, with a view to reaching a deal by late September. The team also includes major South Korean chipmaker SK Hynix Inc. and US technology giant Apple Inc.

Toshiba itself is financially involved in the consortium to keep a certain voting rights stake in Toshiba Memory.

Some Japanese companies, including major optical equipment maker Hoya Corp. will also join the consortium, the sources said, adding that Toshiba and Japanese members of the team will initially own a majority of the voting rights in Toshiba Memory.

Innovation Network Corp. of Japan, an investment fund affiliated with the Japanese government, and the Development Bank of Japan, a government lender, will put up funds for the Toshiba Memory acquisition after a lawsuit filed by Western Digital to block Toshiba's sale of the unit to a third party is settled.

Toshiba plans to complete the chip unit sale by the end of March 2018, aiming to wipe out its negative net worth using the proceeds from the deal and prevent its delisting from the Tokyo Stock Exchange.

Toshiba has incurred hefty losses from its nuclear business in the United States. Toshiba was demoted to the TSE's second section from the first section on Aug. 1. Jiji Press