Toshiba’s $19b chip sale delayed

DEAL WITH A GROUP HAS SO FAR FAILED TO WIN APPROVAL BY CHINESE REGULATORS

After waiting more than a year to learn the fate of its memory chip business, Toshiba Corp. investors are going to have to hold on a little longer.

The Japanese technology giant said yesterday it’s missed an initial deadline to close the 2 trillion yen (Dh69.7 billion) sale of the division by the end of March, pushing back the disposal of its biggest business by at least a month.

The deal with a group led by Bain Capital has so far failed to win approval by Chinese regulators as they weighed the impact on the world’s biggest market for semiconductors. Under the agreement’s terms, the new deadline for closing would then be May 1, and Toshiba would need regulatory approval by April 13 to meet that.

Three options

Toshiba, which invented NAND chip technology, put the memory business on the auction block in 2017 as it sought to repair a balance sheet hammered by billions of dollars worth of losses from a push into nuclear energy. If the Bain deal falls apart, Toshiba has at least three options: re-negotiate the terms, potentially at a higher price, take the memory chip business public or retain the division.

“Most investors operate under an assumption that the sale will eventually go through,” said Hideki Yasuda, an analyst at Ace Research Institute. “But if it doesn’t, there is really no downside for Toshiba.”

Officials at China’s Ministry of Commerce are said to be concerned about the role of SK Hynix Inc., which is part of Bain’s group. The South Korean chipmaker may end up with a significant stake in the business, consolidating power among the top players, people familiar with the matter have said. The ministry could also impose conditions that would materially impact the value of the business, such as requiring Toshiba to freeze prices or separate its solid state disk and chip memory operations.