Monday, 24 September, 2018

Toshiba enters exclusive chip sales talks with US-SKorea-Japan group

Toshiba Toshiba enters exclusive chip sales talks with US-SKorea-Japan group
Nellie Chapman | 22 June, 2017, 06:39

But prospects for a clean early resolution to the sale of the world's No. 2 producer of NAND flash chips remain unclear as Western Digital (WDC.O), its chips business partner that has launched legal action to prevent a deal without its consent, was not part of the winning group.

AUSTIN, Texas -Toshiba Corp. announced Wednesday (June 21) that is board of directors selected a consortium made up of the Innovation Network Corporation of Japan (INCJ), Bain Capital and the Development Bank of Japan as its preferred bidder for its memory chip spinoff, Toshiba Memory Corp.

Toshiba wants a formal memory business unit deal agreed and signed by June 28, and completed by March 31, 2018.

Toshiba is pushing hard to move the sale forward in the face of a particularly persistent obstacle. The company has an existing deal with Toshiba for chip technology and has sought a court injunction in the United States to prevent Toshiba from selling its chip business without its consent, as it fears that joint venture technology could be sold to one of its competitors, such as SK Hynix.

It said it filed a request for arbitration last week. With the outcome still up in the air, any legally binding agreement on preferred negotiating rights would be risky.

The other leading contender was United States chipmaker Broadcom, which made an offer of about 2.2 trillion yen, according to people with knowledge of the matter.

Toshiba is selling off its crown jewels to help recover from billions of dollars in losses stemming from the collapse of Westinghouse Electric, its now bankrupt US nuclear unit.

The numbers have yet to be finalised and are still subject to change, one of the sources said. Given how long antitrust reviews generally take, the company is running out of time.

But arranging an official deal will be no easy task. "But we still have the Western Digital lawsuit, so it's not as if this will make everything alright".

SK Hynix is Western Digital's rival and might impede the California company from joining the Japan-led consortium.

Toshiba's earnings reports have failed to get endorsements from its auditors, given the company's precarious finances over the USA projects. "South Korea alliance and Toshiba on the sale would likely proceed", Hattori said.

For potential chipmaker buyers, control of Toshiba's output of memory chips is crucial in making any investment worthwhile.