Bain to submit bid for majority stake in Toshiba chip unit

Gladys Abbott
May 20, 2017

It was not clear if KKR and its partners would submit their offer by the end of the day.

Top officials of Toshiba Corp. and its estranged USA business partner Western Digital Corp. are set for a fresh round of talks seeking a resolution to the row over the sale of Toshiba's chip unit.

Broadcom, based in San Jose, California, is offering about 2.2 trillion yen (S$28.6 billion) and would face simpler regulatory reviews than some rivals, said one of the people, asking not to be identified because the matter is private. INCJ is one of the suitors in the sale of Toshiba Memory.

Bain's bid will allow Toshiba and the management of the memory chip business to own a sizeable holding in the chips unit, the people said, adding that keeping management in place will help the business grow faster.

Toshiba's future as a public company depends on selling the memory chip unit and raising cash to pay for losses in its Westinghouse nuclear business. It is set to join hands with a state-backed fund, the Innovation Network Corp of Japan (INCJ), in an offer of at least 1.8 trillion yen, one person said, adding that the bid could be raised to make it more competitive.

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Kaori Hiraki, a spokeswoman for Toshiba, and Toshimitsu Irie, a spokesman for INCJ, declined to comment. The government has also encouraged Western Digital and Toshiba to work out a compromise over disputes that have arisen over the spinoff and sale of Toshiba Memory.

Taiwan's Hon Hai and South Korea Hynix have also expressed interest in purchasing Toshiba Memory, and returned bids as high as $27 billion, but it is believed that these groups would have a hard time gaining approval from the Japanese government.

US chipmaker Broadcom and Silver Lake did not immediately rely to requests for comment outside of regular USA business hours.

According to the Nihon Keizai Shimbun, a consortium led by Bain and SK Hynix has offered a management buyout deal where a special goal company (SPC) would buy 51 percent or more in the memory division, leaving the rest with the company and Toshiba Holdings. The South Korean company is widely expected to suggest a price higher than 2 trillion Japanese yen (US$18 billion) proposed during the first bidding.

Foxconn and Sharp declined to comment. Get your FREE trial to Buyouts!

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