Toshiba Corp. to step up chip talks with Bain; Western Dig­i­tal still in run­ning

Business World - - WORLD BUSINESS -

TOKYO — Toshiba Corp. has signed a mem­o­ran­dum to step up talks to sell its mem­ory chip busi­ness to a group led by pri­vate eq­uity firm Bain Cap­i­tal and South Korean chip­maker SK Hynix, Inc., the Nikkei news­pa­per said on Wed­nes­day.

But the strug­gling Ja­panese con­glom­er­ate also plans to con­tinue talks with Western Dig­i­tal Corp. which is lead­ing a ri­val group bid­ding for the $18-bil­lion semicon­duc­tor unit, the re­port said.

Toshiba said it had no com­ment. A rep­re­sen­ta­tive for Bain de­clined im­me­di­ate com­ment.

The re­port comes af­ter the Toshiba’s board met ear­lier in the day. Sources told Reuters on Tues­day that Toshiba now fa­vored the Bain group af­ter fail­ing to bridge key gaps in talks with busi­ness part­ner and ri­val bid­der Western Dig­i­tal.

Toshiba now hopes to reach agree­ment with the Bain group by next week, said the sources, who de­clined to be iden­ti­fied as the talks were pri­vate.

Dis­cus­sions with Western Dig­i­tal fal­tered as Toshiba, fear­ing its part­ner was an­gling to even­tu­ally take over the chip busi­ness, sought to limit the US firm’s fu­ture stake in the unit, the sources said.

The em­bat­tled con­glom­er­ate has been rush­ing to fin­ish the deal to cover bil­lions of dol­lars in li­a­bil­i­ties at its US nu­clear busi­ness, West­ing­house.

Toshiba needs to clinch a deal soon so that reg­u­la­tory re­views can be com­pleted by the end of the fi­nan­cial year in March.

If it does fail to se­cure suf­fi­cient fi­nanc­ing by then, it is likely to re­port neg­a­tive net worth, or li­a­bil­i­ties ex­ceed­ing as­sets, for a sec­ond year run­ning — a sce­nario that could re­sult in a delist­ing from the Tokyo Stock Ex­change. —

TOSHIBA’S used-mem­ory chips are seen at an elec­tron­ics shop in Tokyo, Nov. 9, 2010.

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