Toshiba favors Bain group for chip sale; Western Digital talks stall

Andrew Cummings
September 13, 2017

Toshiba's head office is pictured in December 2015. The Toshiba board is to meet tomorrow to make a final decision.

The Japanese conglomerate, which needs to sell the chip business to plug a huge hole in its finances, had been trying to seal a deal by Wednesday with the Western Digital group but now hopes to reach agreement with the Bain group by next week, said the sources, who declined to be identified as the talks were private. -South Korean consortium it had initially picked as its favored bidder.

However, if Western Digital remains a minority investor in the business, Apple, a top customer for Toshiba chips, is offering about 50 billion yen ($460 million) to a group including the U.S. firm to help finance a bid, one source said. Japanese banks and companies will also provide financing.

Toshiba is now trying to offload its NAND unit with a consortium including Western Digital and another containing SK Hynix standing as the top bidders.

Toshiba is hoping to quickly sell the chip unit to cover up massive losses stemming from its now-bankrupt USA nuclear unit. If it goes through, the sale would be completed by March next year and enable Toshiba to avoid a negative equity-driven delisting by the Tokyo Stock Exchange.

At one point yesterday it looked like Western Digital had the nod but a new report by Reuters published earlier today now states that "Toshiba now favors a group led by Bain Capital LP and SK Hynix to buy its prized semiconductor business, as it failed to bridge key gaps with its business partner and rival bidder Western Digital Corp, two people briefed on the matter said on Tuesday".

Toshiba is running out of time as it would typically take more than six months to receive clearance for the chip unit deal from regulators in major countries.

In a plan offered in late August, the Japan-U.S.

The WDC-led bid group includes the Innovation Network Corporation of Japan (INCJ), the Development Bank of Japan (DBJ) and sundry Japanese companies, including, somewhat oddly, Toshiba itself.

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