Toshiba still in talks over chip unit sale one day before deadline

Andrew Cummings
September 13, 2017

"We are disappointed that Toshiba would take this action despite Western Digital's tireless efforts to reach a resolution that is in the best interests of all stakeholders", it said.

Toshiba Corp. (TOSYY) said Wednesday that it has signed a letter of agreement to sell its prized memory chip unit to a group of bidders led by Bain Capital LLC, potentially marking the end to the prolonged sale process that looks to eliminate Western Digital Corp.

Cowen and Company reiterated their outperform rating on shares of Western Digital Corporation (NASDAQ:WDC) in a research report report published on Saturday, August 26th.

The offer by Bain and the Korean chipmaker is created to get around that problem as it will invite two state-backed investors - the Innovation Network Corp of Japan (INCJ) and the Development Bank of Japan - to invest in the business only after any arbitration with Western Digital is settled, several sources have said. Following a string of losses from the bankruptcy of Westinghouse (Toshiba's nuclear energy division in the United States), a sale of the chip division could remove uncertainty for stockholders over the future of the company. Western Digital has not commented on the reports. The group put forward its latest offer last week, exceeding Western Digital's $18 billion bid. The consortium and Toshiba aim to announce a deal on Wednesday or Thursday. Western Digital's thought to have since retracted part of its bid.

The report further noted that "All three bidder groups have roped in major chip buyer Apple Inc to bolster their offers, sources have said".

"We think the outcome is a positive for Western Digital", Daryanani wrote.

The relationship between Western Digital, which was a 50 per cent share stake in Toshiba's NAND flash factories in Japan, acquired following its $19bn acquisition of SanDisk, deteriorated this year as WD tried to strong-arm Toshiba into accepting its bid. It's now unclear how much involvement Western Digital desires to have in the business.

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