Toshiba seeks unit offers
Toshiba is sending letters soliciting offers for its memory chip business this week and seeking bids that value it at about ¥1.5-trillion ($13.3bn), according to people familiar with the matter.
The Japanese conglomerate is offering a majority stake in the chip unit and would be willing to sell the entire business, said the people, asking not to be identified because the matter is private. A ¥1.5-trillion valuation for the whole operation would be below earlier reports the chip unit could fetch ¥2-trillion or ¥2.5-trillion.
Toshiba is reeling from losses in its US nuclear division and is selling assets to stabilise its balance sheet.
President Satoshi Tsunakawa originally sought to sell a minority stake in the memory chip business but has been forced to give up control because of the financial troubles. Regardless of the money it raises, Toshiba will probably be dropped from the first tier of the Tokyo Stock Exchange.
Potential bidders that have expressed interest in the unit include Korea’s SK Hynix, Taiwan’s Foxconn Technology Group, Western Digital and Micron Technology, the people said. Among the financial bidders are Bain Capital, Silver Lake Partners and KKR.
Toshiba spokesman Motohiro Ajioka declined to comment about the memory chip deal.
Western Digital didn’t immediately return calls and messages seeking comment. Micron and Silver Lake declined to comment. Hynix has said previously it is interested in Toshiba’s chips business.
Foxconn founder Terry Gou said on Wednesday he was “very serious” about acquiring Toshiba’s chips business. He said his company could give Toshiba financial support to build new factories in China.
Toshiba shares rose 1.6% in Tokyo trading. The stock has tumbled 25% this year.
Foreign buyers are under consideration in the sale, but would have to abide by requirements to maintain employment and keep production in Japan, one of the people said. Toshiba views financial buyers as more likely winners because they would probably be able to secure regulatory approval more easily, the person said.
Bidders that already produce flash memory chips would face antitrust scrutiny, which may slow down completion and delay the cash Toshiba needs. Samsung Electronics is the largest provider of memory chips, followed by Toshiba. Western Digital, Micron and Hynix are all smaller players in the market.
Toshiba may struggle to get the ¥1.5-trillion valuation for its chip business despite the broad interest, one of the people said. The company’s estimates for capital expenditures appeared to be too low to sustain the business, the person said.
Toshiba is aiming to complete the transaction by March 2018. Goldman Sachs is advising Toshiba on the sale.