Broadcom, KKR leading bidders for Toshiba unit

Broadcom and a group led by KKR are emerging as the two leading bidders for Toshiba’s semiconductor unit as of Friday’s deadline for second-round offers, according to people familiar with the matter.

Broadcom, based in San Jose, California, is offering about 2.2 trillion yen ($20 billion) and would face simpler regulatory reviews than some rivals, said one of the people, asking not to be identified because the matter is private. The competing group, which includes state-backed Innovation Network Corp. of Japan and Development Bank of Japan, plans to offer about 1.8 trillion yen and would benefit from support from the country’s government, the people said. There were a total of four bids, one of the people said.

Western Digital Corp. has been in talks to join the Japan group, but the parties haven’t been able to agree on how to divvy up ownership. The company has been offered a stake of less than 20 per cent, but it wants a controlling share, they said. Toshiba and Western Digital executives plan to meet next week to discuss these and other issues, one person said. Apple Inc., which uses Toshiba memory chips in its products, is still considering whether to contribute capital to one or more bidders, they said.

Toshiba’s future as a public company depends on selling the memory chip unit and raising cash to pay for losses in its Westinghouse nuclear business. Time is critical because its shares may be delisted if it hasn’t closed the deal by next March, the end of its fiscal year. While Taiwan’s Hon Hai Precision Industry Co. and South Korea’s SK Hynix Inc. have also expressed interest with preliminary bids of as much as $27 billion, Japan’s government is reluctant to let the business fall into their hands.

BLOOMBERG