Bain, INCJ consortium named preferred bidder for Toshiba chip unit

Speaking to Reuters, a spokesperson for Toshiba said the consortium offered around JPY2 trillion ($18 billion). In a statement the company said the offer represented the best proposal “not only in terms of valuation, but also in respect to certainty of closing, retention of employees, and maintenance of sensitive technology within Japan.”

The consortium, which also includes Development Bank of Japan, beat out a host of other strategic and PE players including Broadcom, Foxconn Technology Group, Western Digital, Silver Lake and KKR. South Korean memory chip maker SK Hynix, which announced last month it had joined one consortium, is reportedly in talks to finance the winning offer.

Bids in the process had reportedly reached as high as JPY2.2 trillion, but Toshiba was concerned about the likelihood that Japan’s government would resist the purchase of a major Japanese chip maker by a foreign source.

Toshiba wants to finalize the agreement before its annual general meeting at the end of June, where it will present the plan to shareholders. In order to remain a listed company, it must close the deal before March 2018, including obtaining regulatory approval in various jurisdictions. The deal could face additional resistance from Western Digital, which says its joint venture agreement with Toshiba requires its consent to any sale.

Toshiba posted revised net sales of JPY4.87 trillion for the 12 months ended March 2016, down from JPY5.14 trillion the previous year. The company’s net loss widened to JPY950 billion from JPY460 billion, largely due to write-downs from its Westinghouse nuclear power unit, which filed for bankruptcy at the end of March and is now considered a discontinued operation.

The storage and electronic device solutions division, of which TMC is a part, generated sales of JPY1.7 trillion in 2016, up from JPY1.57 trillion the previous year. It was comfortably the best performing part of Toshiba’s business, with operating income of JPY247 billion, compared to a loss of JPY100 billion in 2015.

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• Topics
• North Asia
• Technology
• Buyouts
• Japan
• Innovation Network Corp. of Japan (INCJ)
• Bain Capital Asia
• Silver Lake
• KKR
• buyout