Toshiba Signs MoU To Favor Bain Consortium For Memory-chip Business Sale


For SK hynix, the ongoing talks do not seem positive, considering the Korean chipmaker had an ambition to a stake in Toshiba's memory chip business specializing in 3-D NAND flash.

Toshiba has announced that it's entering negotiations with a bidding group led by American investment capital company Bain Capital to purchase its silicon manufacturing business over objections from manufacturing partner Western Digital.

At various points in the negotiations, Toshiba has leaned toward the camp that includes Western Digital, a US -based maker of hard-disk drives.

Earlier this evening in Japan, news of what could be announced officially in the days to come is that the Bain bid with SK Hynix and Apple is going to be the victor for Toshiba's chip business. $102.03's average target is 21.12% above currents $84.24 stock price.

Yoshimitsu Kobayashi, an external Toshiba director, said at a press conference on Tuesday at the Keizai Doyukai group of corporate executives, that though the deadline is important, it is also important that negotiations head in a good direction. Apple is said to have offered 50 billion yen ($460 million) to the rival group opposing Bain.

Toshiba is seeking to unload the chip unit as part of a survival plan in the wake of huge losses at its USA nuclear unit Westinghouse Electric Co., which filed for bankruptcy earlier this year. According to Western Digital, which bought SanDisk a year ago, the agreements might be violated because the company has a joint venture with Toshiba and they are working together on the same technology.

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Regardless of which party Toshiba chooses, antitrust clearance is likely to be a hurdle because getting approval in major markets can often take more than six months.

According to the consortium's final proposal, Bain is to own 49.9 percent of the chips unit, while Toshiba retains 40 percent. Broadcom is a leading manufacturer of chips used in wireless and broadband communication. Vetr lowered Western Digital Corporation from a "strong-buy" rating to a "buy" rating and set a $95.94 target price for the a research note on Tuesday, August 22nd. KKR & Co LP and Japanese government investors, as well as Bain Capital and South Korea's SK Hynix, and Foxconn are among those also tipped for the deal, however WD seems poised to be successful.

Toshiba said it will continue to talk with Western Digital, which has taken the matter to US and global courts, and another group led by Taiwan's assembler giant Hon Hai Precision Co.

Yet it failed to do so, and media had reported that Toshiba was leaning to sign a deal with Western Digital.

It said "arbitration requests" are on file and continue to move forward in the ICC International Court of Arbitration. Toshiba hopes to find agreement with the Bain group in a deal expected to be worth around 2.4 trillion yen ($22 billion). "We remain confident in our ability to protect our joint venture interests and consent rights".