Toshiba talks to suitors in new sale bid
• Alternative bidders back in the race for chip business
Toshiba is in talks with Western Digital and Taiwan’s Foxconn, as well as with an already preferred bidder, as it seeks to revive the stalled $18bn sale of its chip business, according to banking sources.
The Japanese conglomerate confirmed it was in talks with suitors but did not name them, noting it had been unable to reach an agreement by a selfimposed June 28 deadline with its preferred bidder — a group that includes state-backed fund Innovation Network Corporation of Japan, the Development Bank of Japan, US private equity firm Bain Capital and South Korean chip maker SK Hynix.
A representative for Western Digital declined to comment, and a representative for Foxconn, the world’s largest contract electronics maker, was not available for comment.
Talks with the preferred consortium have stalled over what sources say are proposals by SK Hynix that it helps fund a deal through convertible bonds. That could eventually give it an equity interest in the world’s secondlargest maker of NAND flash memory chips. Toshiba does not want its South Korean rival to have an equity or management influence in the chip business.
It has taken the position to satisfy the Japanese government, which is keen to keep Toshiba’s technology under domestic control.
Toshiba told its creditor banks at a meeting on Tuesday that it had begun talks with alternative bidders because talks with the consortium had stalled, the banking sources said. They did not want to be identified as they were not authorised to speak on the matter.
“Toshiba had no option but to say it’s in talks with other suitors because the preferred consortium is falling through,” said another official involved in the talks, who also requested anonymity because the negotiations are sensitive.
Toshiba needs to sell its chip business to plug a hole in its balance sheet by the fiscal year-end in March, to avoid an automatic delisting of its shares from Tokyo’s stock market.
The 140-year-old laptops-tonuclear conglomerate was still recovering from a $1.3bn accounting scandal in 2015 when it was hit by billions of dollars of cost overruns at its now bankrupt US nuclear unit, Westinghouse, in December.
Sources have said that Innovation Network and the Development Bank of Japan, said to be wary of SK Hynix, could back a deal with Western Digital.
Toshiba executives have been reluctant to consider a deal with Western Digital, with sources saying ties have been strained since Western Digital bought SanDisk, Toshiba’s memory chip business partner, in May 2016.
In 2016, Western Digital sought a US court injunction to prevent Toshiba selling the chip unit without its consent. A hearing on that request is scheduled for Friday. In July 7 court documents, Western Digital said it matched rival bidders’ offers to buy the flash memory unit, though the actual dollar figure of the bid was redacted.
IT HAD BEEN UNABLE TO REACH AN AGREEMENT BY A SELF-IMPOSED JUNE 28 DEADLINE WITH ITS PREFERRED BIDDER