Toshiba Said to Select Bain Group as Chip Buyer Over Western

Toshiba Said to Select Bain Group as Chip Buyer Over Western”

Meanwhile, Western Digital (NASDAQ:) said it would be commencing arbitration against Toshiba through its subsidiaries. The memory chip business is its crown jewel, which has attracted interest from major tech companies like Taiwan's Foxconn.

Toshiba said it signed an agreement to sell its semiconductor unit to a consortium led by private equity firm Bain Capital for about $18 billion, the latest twist in a months-long saga over the Japanese conglomerate's effort to sell its prized NAND flash business to offset massive losses incurred by its US nuclear power subsidiary.

Through a press release, Toshiba said it will sell all shares of Toshiba Memory Corporation to Pangea, a special objective acquisition company formed by a Bain-led consortium.

The bidding process had been plagued by fears in Japan that the valuable technology could end up under foreign control.

"Western Digital may come up with a new offer, and the intention of the Japanese government or creditors may also emerge as another variable", an industry insider said, claiming situations may change down the line. Then, Toshiba would invest around $3.1 billion to buy shares of the company, giving it some influence over the business and access to some profits.

Also, Innovation Network Corporation of Japan (INCJ) and Development Bank of Japan Inc.

Western Digital said in a statement Wednesday that it is not backing down because of Toshiba's announcement.

The agreement may not be the end of the saga, however.

The Bain group fended off a challenge from USA data storage firm Western Digital, whose subsidiary SanDisk has a joint venture with Toshiba.

Western Digital Corporation has sought to prevent the sale of the interests of the Joint Ventures to any third party, and the two parties are now engaged in litigation and arbitration.

The Western Digital statement read, in part, "It is troubling that Toshiba would pursue this transaction without SanDisk's consent, as the language in the relevant JV agreements is unambiguous, and courts have entered multiple rulings in favor of protecting SanDisk's contractual rights".

Upon completion of the transfer of TMC shares and required approvals/filings, including those to competition authorities, Toshiba will record an approximately 1,080 billion yen improvement in its FY2017 consolidated income (before tax).

Toshiba is selling the memory chip business get out from under a massive financial crisis threatening its very survival. The collapse of its US nuclear unit Westinghouse, which filed for bankruptcy earlier this year, cost the storied Japanese company some $6.4 billion.

The loss forced Toshiba to report a negative net worth for the fiscal year that ended in March.

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