Toshiba Misses a Self-Imposed Chip Sale Deadline, Increasing Future Risks

Apple has joined a consortium of companies led by the investment firm Bain Capital in a revised [$18 billion] last-ditch offer for Toshiba's chip unit.

The new offer comes as separate sources say the embattled Japanese conglomerate and Western Digital Corp are struggling to strike a deal ahead of their self-imposed deadline of Thursday.

Toshiba said it has yet to decide on a buyer for its memory chip business.

The proposal also calls for Toshiba to be part of the deal, investing 200 billion yen, the source said.

The bid trumps the 1.9 trillion yen offered by the Western Digital-led consortium, which also includes US private equity firm KKR & Co LP.

But the deal stalled after Western Digital, Toshiba's joint partner at their chip plant in Mie Prefecture, claimed Toshiba's sale of the memory business without its consent would breach their joint venture contract.

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Toshiba has been in negotiations for months to sell off its chips business and pay for a disastrous move into the US nuclear business.

Alternatively, a combined Toshiba and Western Digital business could be nearly as large as Samsung's memory unit, giving it more negotiating leverage against Apple.

Apple depends on flash memory from Toshiba in its iPhones and iPods and wants a continued supply so it's not dependent on rival Samsung. Toshiba Memory is expected to sell for $18 billion, according to press reports.

A previous deal, led by Bain was chosen by Toshiba as its preferred bidder but was blocked by Toshiba over its reluctance to do a deal in the face of Western Digital's legal threats. The INCJ and the DBJ are expected to hold a controlling stake in the company in the future. A Western Digital representative declined to comment. Toshiba and Western Digital combined could be as a large as Samsung's memory division. Despite also being linked to the Bain Capital bid, the two organisations, which are both funded at least partially by the Japanese government, will supposedly back whichever deal offers the best outcome for Japan.

Toshiba was working under creditor pressure to strike a deal by the end of the month, sources with direct knowledge have said, as any later would make it hard to gain regulatory approvals before its books closed in March.

(Copyright © 2015. All Rights Reserved.)
 
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