Foreign buyers prove more determined in bids

TOKYO: Toshiba Corp and the Japanese government want to sell the company’s semiconductor business to a domestic buyer, but foreign bidders are proving determined and aggressive as the auction heads toward a final decision in the coming weeks.

Taiwan’s Hon Hai Precision Industry Co, South Korea’s SK Hynix Inc and chipmaker Broadcom Ltd have all submitted preliminary bids for the Toshiba business valued at two trillion yen (RM79.9 billion) or more, said people familiar with the matter.

Hon Hai has indicated it may pay as much as three trillion yen to force Japanese management into negotiations. Hynix is in talks with Japanese investors on a joint bid, in part to overcome political hurdles.

The Japanese government has made no secret of the fact that it wants to keep the business in the country, citing the strategic importance of chip manufacturing in future technologies.

So far though, foreign bidders appear more likely to land the operation. Hon Hai, led by chairman Terry Gou, has proven particularly aggressive, much like it was when Gou faced down Japan government opposition to win control of Sharp Corp last year.

In that case, he also made an extremely high opening bid to pressure management into negotiations, only to later backtrack and reduce his offer. Gou still won the auction and has made progress in turning around Sharp.

Gou’s bid for Toshiba’s chip business faces stiff resistance in part because Hon Hai’s factories are located in China and he would likely move semiconductor manufacturing into the country. Japan is concerned Hon Hai would transfer Toshiba intellectual property to China.

Hynix is in negotiations with partners for a joint bid, including Japanese investors, and has said the Korean company won’t own more than 20 per cent of the chips business, one person said.

That’s aimed at helping Hynix win approval for its offer from Japanese authorities. Bloomberg