Toshiba to sell chip business to Bain-led group for $18 billion

Big 5

Troubled Japanese conglomerate Toshiba has agreed to sell its prized memory business to a group comprising Bain Capital and South Korean chipmaker SK Hynix.

Toshiba said the deal to sell the world No.2 producer of NAND memory chips was worth about 2 trillion yen ($18 billion). It had hoped to sell the business to plug a hole in its finances caused by the bankruptcy of its U.S. nuclear unit Westinghouse. Without the sale, it may have been delisted.

But its attempt to flog the chip maker was complicated by its partners and changing alliances among its suitors.

Earlier, Reuters reported that Toshiba was shifting back toward selling the business to a group backed by joint venture partner Western Digital. Toshiba said it assumes the deal will go ahead despite leagal challenges from Western Digital.

Last week, Toshiba said it had entered into a non-binding memorandum of understanding with Bain Capital Private Equity to negotiate a “mutually satisfactory definitive agreement” for the sale of the chip business by the end of the month.

Toshiba said it had been negotiating with three potential groups to sell its memory business. One consortium included Bain Capital, the Innovation Network Corporation of Japan and the Development Bank of Japan. Another included Western Digital and a third involved iPhone assembler Hon Hai Precision Industry.

During negotiations, Toshiba said Bain had come forward with a new proposal and that its board of directors “determined to continue negotiations with the Bain-led consortium on the basis of this new proposal.”

Reuters reported that under the new proposal, Bain had partnered with SK Hynix and brought in U.S. tech firms such as Apple and Dell, who are both buyers of Toshiba chips, to bolster the offer.

Analysts have previously said the sale of the memory business could be key to turning around the broader business.

Before the deal was concluded, Toshiba shares jumped 2.86 percent to 324 yen but closed flat. Meanwhile, SK Hynix shares were up 1.64 percent.

Source: CNBC