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Toshiba closer to deal with Bain, Hynix group

Sept 21,2017
Toshiba picked a Bain Capital-led consortium that includes SK Hynix as a preferred bidder for its memory unit, according to the Korean chipmaker and various media reports Wednesday, raising expectations a deal that has been dragging along since February will finally be sealed.

The troubled Japanese semiconductor giant has been vacillating over several bidders and even gave the nod to the same U.S.-Japan-Korea consortium in June, but then changed its mind.

The consortium includes SK Hynix, the public-private Innovation Network Corp. of Japan and the state-backed Development Bank of Japan.

It is led by Bain Capital and is set to buy Toshiba Memory for around 2 trillion yen ($17.95 billion). The consortium proposed adding 400 billion yen to the purchase price, the Sankei Shimbun reported.

Apple, which has been buying up over 30 percent of Toshiba’s NAND flash chips, and Dell are expected to join the group, and Toshiba will keep a certain amount of shares to retain influence, according to Nikkei.

The Sankei Shimbun added Bain will get the biggest share of voting rights at 49.9 percent, followed by Toshiba’s 40 percent, and 10.1 percent for the two other Japanese companies. It noted that Japanese investors still will control a majority stake.

SK’s voting rights will be limited to about 15 percent over concerns of antitrust challenges.

In Japan, it was also worried that the Korean chipmaker’s participation in the acquisition would allow tech leaks, weakening Japan’s competitiveness in semiconductors.

SK Hynix released no official statement. Its spokesman said that being chosen as a preferred bidder does not mean the deal is finalized.

“We still have many upcoming procedures ahead of us, including a contract signing and working out various negotiations,” he said.

The Toshiba Memory deal has taken many twists in the past three months, with complicated webs of competing bidders.

In July, Toshiba’s business partner Western Digital filed an injunction with a U.S. court to block sale of the memory arm. A month later, the American hard-drive manufacturer formed its own consortium that consisted of American private-equity firm Kohlberg Kravis Roberts, the Development Bank of Japan and Innovation Network Corp. and entered into negotiations by offering 2 trillion yen.

While the talk between Toshiba and Western Digital reached an impasse Toshiba announced last week that it would once again focus on negotiations with the Bain-led consortium.

Sources said Western Digital had failed to agree on limits to its future stake in the chip unit that were demanded by Toshiba.

Toshiba wants to wrap up the sale of its memory unit by the end of its fiscal year next March to fill a massive hole in its balance sheet generated by losses from its U.S. nuclear arm. The chipmaker faces the risk of being delisted from the Tokyo Stock Exchange.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]