Hynix joins bid for Toshiba's memory chip unit as PE firms circle

Hynix said in a filing that it was participating in a consortium, without naming the other members. A host of strategic and private equity players have been linked with Nand, including Broadcom, Foxconn Technology Group, Western Digital, Silver Lake and KKR. Innovation Network Corporation of Japan (INCJ) could also join one of the bidding groups.

According to The Financial Times, Hynix is backing the Bain offer, which would see the PE firm take a 51% stake in Nand, with the rest split between two unnamed US technology companies, the management team at Nand, Toshiba and some smaller investors. Toshiba’s joint venture with Western Digital would also remain in place.

Western Digital says it can block the Nand sale because if it doesn’t consent to a deal, that would be a breach of the JV agreement. This is one of a number of twists in a politically sensitive situation – Toshiba has to sell the business to due to losses incurred by its Westinghouse nuclear unit, but the Japanese government is reluctant to see a prized asset fall into the hands of a foreign rival.

Toshiba posted revised net sales of JPY4.87 trillion ($43.7 billion) 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 the Westinghouse 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 Nand 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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