KKR, BAIN VYING FOR JAPAN SUPPORT

Toshiba’s board unlikely to make final decision, says executive

KKR & Co and Bain Capital LP are vying for support from Japan’s government in their efforts to acquire Toshiba Corp’s semiconductor division as the Japanese company’s board meets yesterday to consider bids, according to people familiar with the situation.

The United States private equity firms were competing for the backing of two state-supported funds, Innovation Network Corp of Japan and Development Bank of Japan, seen as essential in winning government approval for an acquisition, said the people.

Western Digital Corp, which jointly owned certain chip assets with Toshiba, had also had discussions with both firms, said the people. Toshiba’s board was unlikely to make a final decision, said an executive.

Nothing had been finalised in the alliances and the state-backed funds might choose which bid to support after Toshiba’s board picked a preferred acquirer, said the people.

US chipmaker Broadcom Ltd is offering about 2.2 trillion yen (RM85 billion) for the business, more than either of the private equity firms, though price will not be the only factor in deciding a winner.

Time is running out for Toshiba to sell the chips unit and raise cash needed to stabilise its finances after a disastrous foray into the nuclear power business. The company needs to complete the sale by March next year, the end of its fiscal year, or risk having its shares delisted from the Tokyo Stock Exchange.

Toshiba’s ability to meet that deadline has been jeopardised by clashes with Western Digital, which has objected to the chip unit auction and filed for an injunction to block the sale in California court. The Japanese firm said it planned to proceed despite the legal action.

“We cannot comment as we have not yet received the complaint,” said Toshiba spokeswoman Kaori Hiraki.

“We are proceeding with selecting the preferred bidder by the end of this month, and will seek to close the definitive agreement by June 28.”

Western Digital filed for its injunction to block the sale yesterday, here, the day of Toshiba’s board meeting, requesting the auction be put on hold while pursuing arbitration claims against Toshiba.

... we will seek to close the definitive agreement by June 28.

KAORI HIRAKI Toshiba spokeswoman