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China finally approves Toshiba Memory deal

May 19,2018
At long last, the Toshiba Memory saga has come to an end.

Chinese antitrust authorities finally approved the sale of Toshiba’s memory unit to a U.S.-led consortium that includes Korean company SK Hynix. This acquisition will give SK Hynix, the world’s third-largest chipmaker, a huge boost in NAND flash memory.

On Thursday, the Japanese electronics conglomerate announced that it “confirmed receipt of all required antitrust approvals in respect to the sale of Toshiba Memory.”

A consortium of Japanese, Korean and American companies led by investment firm Bain Capital was chosen as the preferred bidder for Toshiba Memory last September. The consortium offered to buy Toshiba Memory for 2 trillion yen ($18 billion), prompted by Toshiba’s critical losses in nuclear ventures in the United States.

While major semiconductor markets, including Korea, the United States, Japan, the European Union, Brazil, Philippines and Taiwan gave the go-ahead to the takeover, China’s anti-monopoly regulators prolonged the decision. China was wary about the deal strengthening its competitors when it was trying to nurture its own domestic chip industry.

When months passed without a sign of Chinese approval, Toshiba considered giving up on the sale altogether. It even considered an initial public offering for Toshiba Memory, which is valued highly as the global pioneer of NAND flash memory and the second-biggest producer of the chips.

“We welcome the Chinese authorities’ decision,” said a SK Hynix spokesman. “The takeover will be finalized on June 1, when the transactions are expected to occur. No other variables for change remain.”

SK Hynix will invest around 4 trillion won ($3.7 billion) in the takeover. Some 1.3 billion won of it will take the form of convertible bonds that can later be converted into ordinary shares worth 15 percent of Toshiba Memory’s stocks.

SK Hynix’s stake will be limited to 15 percent voting rights for the next 10 years. Industry sources said that the deal will prevent SK Hynix from gaining access to confidential information on Toshiba’s memory unit.

Though the Korean chipmaker will also not being directly involved in management, the deal is expected to strengthen SK Hynix’s position in the global chip industry.


BY SOHN HAE-YONG, HA HYUN-OK [kim.eunjin1@joongang.co.kr]