Bain-led group to buy Toshiba chip unit in US$18bil deal

TOKYO: Toshiba Corp’s board agreed to sell its flash memory chip unit to a group led by Bain Capital for US$18bil (RM75.4bil), taking an important step toward ending a contentious bidding process that has stretched over eight months.

The Bain consortium includes backing from Japanese and overseas companies, including Toshiba, which will reinvest 350.5 billion yen, the company said in a statement.

Apple Inc, Dell Inc, SK Hynix Inc and Japan’s Hoya Corp will provide financial support, according to sources. The iPhone maker played a crucial role in swinging momentum in the tumultuous auction to the Bain offer.

Apple is interested in the chip unit because of the strategic importance of flash memory. The compact chips are essential for its iPhones and iPods, storing every photo, video clip and animoji.

Only a handful of companies make the highest-end technology and the dominant player is Samsung Electronics Co. The last thing chief executive officer Tim Cook wants is to end up dependent on his archrival in smartphones, so he has a vested interest in ensuring Toshiba’s chips unit stays healthy.

Toshiba is selling off its chips business to pay for billions of dollars in losses in its US nuclear business. The company needs to raise the money by March to avoid seeing its shares delisted from the Tokyo Stock Exchange.

Toshiba expects the deal to close by March 31 and aims to restore a positive net worth by the end of the fiscal year, according to the statement.

Toshiba’s board agreed to the Bain proposal at a meeting yesterday. Under the agreement, Bain, Toshiba, SK Hynix and Japan’s Hoya will pay about 960 billion yen for common and convertible stock, while Apple, Dell, Kingston Technology Co and Seagate Technology Plc will spend about 440 billion yen for convertible and non-convertible preferred stock, a source said.

The special purpose entity making the acquisition will be called Pangea and receive about 600 billion yen in loans, the person said.

The auction has gone through dizzying twists and turns. Last week, Toshiba signed a memorandum of understanding (MoU) with Bain, with the goal of reaching a final deal before the end of the month.

But the MoU didn’t preclude Toshiba from continuing to negotiate with other bidders.