Toshiba finally choose buyer for prized memory chip business

Posted September 21, 2017

Japanese conglomerate Toshiba has reportedly chose to sell its memory-chip business to a bidding group which includes South Korean chipmaker SK Hynix and US investment bank Bain Capital.

The move came after Toshiba and Western Digital failed at the last minute to agree on limits to the latter's future stake in the chip business, Reuters reported. Toshiba is the world's number 2 supplier of flash memory and remains a significant force in today's electronics market.

While the South Korean company is awaiting Toshiba's official announcement, according to an anonymous source at SK Hynix, some industry experts argue it was the lack of 3D NAND flash memory technology within the South Korean chipmaker that served as a motivation behind the months-long effort that tilted the scales in favor of SK Hynix.

The make-up of the consortium could spell trouble ahead, said Hideki Yasuda, an analyst at Ace Research Institute.

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.

But one of sources speaking on Wednesday said Toshiba and Western Digital had failed to agree on limits to the US firm's future stake in the chip business that had been demanded by the Japanese company.

The Sankei Shimbun added Bain will get the biggest share of voting rights at 49.9 percent, followed by Toshiba's 40 percent, and 10.1 percent for the two other Japanese companies.

This week, KKR and INCJ worked on a revised bid, with the Japan fund taking a more prominent role in the consortium and planning an initial investment of about 550 billion yen, up from the previous 300 billion yen, people familiar with the matter said.

Toshiba declined to comment.

Toshiba has been trying to spin off its chip business to help mitigate its hefty debt woes and losses related to its now-bankrupt U.S. Westinghouse nuclear unit.

Will Toshiba sign the dotted line to sell its memory chip unit?

Late on Tuesday, sources had said Toshiba was leaning toward selling the business to its U.S. joint venture partner Western Digital Corp.