Toshiba chooses US-Japan bidder for memory chip biz sale

Judith Bessette
Junho 22, 2017

Toshiba is to sell its semiconductor business to a Japanese government-led consortium that also includes companies from Japan, the US and South Korea.

The alliance includes two Japanese companies supported by the government, Innovation Network Corporation of Japan (INCJ) and Development Bank of Japan (DBJ), as well as Bain Capital from the United States.

Toshiba cited the "retention of employees and maintenance of sensitive technology within Japan" among the reasons for choosing the INCJ bid.

Toshiba said it wants to reach a definitive agreement by June 28, the day of its annual shareholders meeting, and wants to complete the transaction by the end of March next year.

Toshiba said recently it was facing a possible 712.5 billion yen writedown on its failing nuclear energy business and a related group net loss of more than 1 trillion yen.

Limiting SK Hynix to only a small stake in Toshiba Memory would make it easier for a deal to clear antitrust review.

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Its U.S. Westinghouse nuclear operations have racked up massive red ink.

Toshiba was widely speculated to announce the bidder a week earlier but pushed back the date due to last-minute variables including new bidding participants and USA chipmaker Western Digital's filing of an injunction suit to block the deal. In a statement, Western Digital said it "will continue to protect its [joint venture] interests and preserve its rights" through arbitration and the courts.

A multinational consortium of companies from Japan, the US, and South Korea now looks best poised to purchase Toshiba's semiconductor business.

The company imposed a JPY2 trillion (US$18 billion) minimum on all parties interested in acquiring the semiconductor unit, which both the Japanese and United States bidders have managed to achieve.

In Tokyo trading, Toshiba rose 0.57 percent to 332.1 yen. Bain Capital is an investment firm headquartered in Boston. They are down about 30 percent since problems at Westinghouse surfaced late a year ago but have come some way off lows as talks about the chip unit sale progressed. Chief Executive Steve Milligan said this month that Toshiba was violating contractual rights and had left the USA firm no choice but to pursue legal action.

The sale of the chip business helps reduce the risk of delisting for Toshiba, but the company has yet to get a clean bill of health from the Tokyo Stock Exchange.

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