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US$18 Billion Deal Encounters Unexpected Trouble

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Originally Written by Raquel Erickson at

Toshiba, Keen to Seal $18 Billion Chips Sale, Wrestles With Last-Minute Delays

Toshiba factoryToshiba’s board signed off Wednesday on selling its computer chip business to a group led by Bain Capital Private Equity, but the deal’s future remains unclear as Toshiba’s USA joint venture partner Western Digital opposes it.

Toshiba and Bain did notimmediately reply to a request for comment.

Toshiba said the agreement assumed the deal would weather legal challenges raised by Western Digital. Attempting to plug a falling balance sheet gap after a cost victory at its now-bankrupt US atomic business, Toshiba has been endeavoring to offer its chip business since late January.

But the auditors finally signed off in August after an investigation that centered on whether Toshiba had known in advance about the losses that emerged related to Westinghouse’s acquisition of CB&I Stone & Webster, a nuclear construction and services business.

The decision to sell the world’s No. 2 producer of NAND memory chips, first reported by Reuters on Wednesday, was made at a board meeting earlier in the day.

The chosen consortium also includes South Korea’s SK Hynix and other Japanese and foreign companies, and JP¥350.5 billion yen (US$3.2 billion) will be invested to stabilize the chip business operations, Toshiba said in a statement.

Bain has partnered with SK Hynix and brought in deep-pocketed USA buyers of Toshiba chips such as Apple Inc. and Dell bolster its bid. Be that as it may, there are significant questions, including the result of antitrust examinations and the fight with Western Digital.

Satoshi Tsunakawa,ToshibaBut in a mark that a contract may not be too long, Satoshi Tsunakawa, the Chief Executive of Toshiba, claimed to the creditor banks of the firm this week, “Please provide me an additional week or so”, as per different sources having knowledge of the sale process. The South Korean chipmaker plans to restrain its part to financing, yet it’s vague on the off chance that it would like to gain a stake later on.

“It’s clear to everyone that this Bain deal will have difficulty succeeding”, said Akira Minamikawa, Akira Minamikawawho is a principal analyst at IHS Markit.

“And strong players there are Samsung and Western Digital, not [new partner] SK Hynix”.

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