Troubled Japanese conglomerate Toshiba has agreed to sell NAND flash memory chip unit to Bain Group for $18.9 billion. The move came after Toshiba and Western Digital failed at the last minute to agree on terms of the acquisition deal. The decision will be announced later on Wednesday, said sourced familiar with the matter.
The Bain consortium is led by an investment of at least $3 billion by Apple Inc., Dell Inc., Seagate, Kingston and the South Korean chipmaker SK Hynix.
‘A fair deal!’ cries embattled Toshiba Group
The auction of the world’s second-largest producer of NAND chips will rescue the embattled Toshiba Corp. from immediate delisting from the Tokyo Stock Exchange (TSE). Massive writedowns on its US nuclear business coupled with the aftermath of the 2015 accounting scandal have put Toshiba under intense pressure from the company’s biggest lenders to sell its prized asset ahead of a March 2018 deadline.
The sale of the Toshiba memory chip unit should remove the looming threat. The completion of the deal is expected to be delayed by antitrust authorities. All because of the legal action launched by Toshiba’s scorned JV partner in the chipmaking business, US group Western Digital.
An Acquisition Game of Twists and Turns
During the final days of negotiation, there was little doubt that the Bain Group would win. It is also said that Taiwanese technology group Foxconn made a highly competitive offer. Things, however, fell through a day before Toshiba made the final decision. Similarly, a bid led by equity group KKR and Western Digital did not progress. In fact, Toshiba board members were not even present during the proposal.
Bain Group revised its offer, by seeking financial support from Apple. Foxconn reportedly asked for Apple’s support to back the bid. The iPhone X maker, however, extended its support to Bain consortium to buy the Toshiba memory chip unit worth $22 billion. Analysts have estimated the sale of Toshiba’s chipmaking business could be a turning point for the broader business.