Toshiba seeks exit from PE-controlled flash memory business

The conglomerate didn’t specify the likely exit route and timing, merely stating that it had no strategic intention to remain in the memory business and would return most of the sale proceeds to shareholders. The plan is for an IPO later this year, according to reports, with Japanese media suggesting the division could achieve a valuation of $32 billion.

The original buyout remains Asia’s largest-ever PE-backed transaction by enterprise value. Bain brought Innovation Network Corporation of Japan (INCJ), Development Bank of Japan (DBJ), Apple, Dell Kingston, Seagate, and SK Hynix into its investor group. They took 49.9%. Toshiba invested JPY350.5 billion in the acquisition vehicle to retain an equity interest, while Hoya Corporation, another Japanese technology player, purchased 9.9%.

The deal was announced in 2017 and closed a year later after a protracted approvals process. Initial resistance came from Western Digital, which operates a Nand flash manufacturing plant as a joint venture with Toshiba. A legal challenge was eventually abandoned. Additional complications arose over regulatory approval from China, the largest global consumer of memory chips.

Previously known as Toshiba Memory Corporation (TMC), Kioxia invented the first Nand flash memory in 1987. It is the second-largest manufacturer of this kind of memory, trailing Samsung, and its factory in Yokkaichi is the world’s largest. The 660,000-square-meter facility – run with Western Digital – contains five fabrication plants and produces flash memory and solid-state drives used in data centers, smart phones, PCs, and electronic devices.

The 2018 sale was prompted by Toshiba’s deteriorating financial position after its Westinghouse nuclear power unit filed for bankruptcy in early 2017. In the past five years, the company claims to have divested businesses with revenues of JPY3 trillion, disposed of non-core assets such as cross-shareholdings worth JPY16 billion, and offloaded subsidiaries for JPY21 billion and real estate for JPY29 billion. It also used the proceeds of the TMC sale for a JPY700 billion share buyback program.

Toshiba is prioritizing its infrastructure services and data services businesses. It is one of several Japanese conglomerates looking to divest non-core assets and focus on areas such as 5G technology, the internet of things, robotics, and artificial intelligence.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• North Asia
• Technology
• IPO
• Industrials
• Japan
• Bain Capital Asia
• manufacturing