Apple man Gou looking for much bigger bite of the chips

TERRY Gou, the billionaire behind Apple’s iPhone factories, is pressing his case to acquire Toshiba’s memory chips business for ¥2.1 trillion ($19.5 billion) in a last-ditch effort to beat two American buyout firms in the tumultuous auction.

Gou’s Foxconn Technology Group has broad support for its offer from Apple, SoftBank Group and Sharp and is ready to proceed right away, says Louis Woo, a spokesman for the company, whose primary listed arm is Hon Hai Precision Industry.

The price tag compares with a rival bid led by Bain Capital said to be worth around ¥2.1 trillion and one from a KKR & Co-led group said to be about ¥2 trillion.

“The bid speaks for itself. It is deal certainty,” said Woo. “What this customer consortium means is that it will provide steady funds to Toshiba to advance their R&D. At the same time, it’s a guarantee there will be more customers lining up to buy their products when they increase their capacity or have better products.”

Toshiba declined to com- ment. The industrial and electronics manufacturer is still negotiating with three groups in the auction of its most valuable business, after failing to secure a final deal with the preferred bidder it selected in June. The effort has been hampered by political opposition and litigation from partner Western Digital.

Japanese government officials have opposed selling the chips unit to Foxconn because of its close ties to China, home to much of the Taiwanese company’s sprawling manufacturing operation, Foxconn.

Gou won control of Osakabased Sharp after protracted negotiations in which politics also played a key role.

Woo detailed the proposed ownership of Toshiba to make the case that it was not a Chinese or even a Taiwanese bid. Foxconn would hold 25% of the equity, Apple 20%, Kingston Technology 20%, Sharp 15%, SoftBank 10% and Toshiba would keep 10%, he said.

“We just hope the board directors of Toshiba will make a decision on commercial terms, on business terms, on technology terms, rather than political terms,” Woo said.

Toshiba needs to raise the money by March to repair its balance sheet and 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 and close the deal.

Woo also made the case that Toshiba was risking its future by delaying.

Besides the risk of delisting, he said, Toshiba’s chips business would fall behind if it couldn’t make investments quickly. – Bloomberg