TOSHIBA’S MANY SUITORS

Firm still unable to decide on final buyer for its chip unit, and the clock is ticking

TOSHIBA Corp has disclosed it was in talks with three consortiums for its memory chip unit and that it’s still unable to make a final decision on a buyer.

There’s one group that includes Western Digital Corp, a second that includes Hon Hai Precision Industry Co and a third comprised of Bain Capital, the Innovation Network Corporation of Japan and Development Bank of Japan (INCJ).

The Japanese electronics conglomerate has been negotiating for months to sell off its chips business and pay for multibilliondollar losses in its United States nuclear business. Although Toshiba identified the Bain-led group as the preferred bidder, the process has been complicated by legal action from Western Digital, which argues that it should have a say in any sale because of its partnership with Toshiba in the chips business.

Toshiba needs to raise the money by March to avoid being delisted from the Tokyo Stock Exchange. Any delay could result in it missing that deadline because of the time needed to get regulatory approval.

Any successful bidder would need to be able to pay enough cash to repair Toshiba’s balance sheet and finance large capital investments in the chip business after the purchase, said the Japanese company. The buyer would also need to possess the ability to make decisions flexibly and quickly, it said.

Bain Capital had submitted a 2.1 trillion yen (RM81.15 billion) offer with INCJ and Development Bank of Japan. Western Digital is offering about two trillion yen. Hon Hai founder Terry Gou has indicated his willingness to pay as much three trillion yen.

Apple Inc is also wading into the middle of the battle. The iPhone maker is in talks with Bain Capital. Apple depends on flash memory from Toshiba in its iPhones and iPods, and wants a continued supply so it’s not dependent on rival Samsung.

In recent weeks, Japan’s Economy, Trade and Industry Ministry had encouraged Toshiba to accept the Western Digital consortium offer, said sources, in an effort to end the litigation and reach a deal quickly.

Top Toshiba executives and its deal advisers are resisting the current offer, arguing it doesn’t do enough to protect the interests of the chips unit or the parent, said the people. Bloomberg