Health Care

Western Digital CEO apologizes to Toshiba for friction over chip unit sale

Western Digital CEO apologizes to Toshiba for friction over chip unit sale”

Apple Inc.is wading into the middle of the battle for Toshiba Corp.'s memory chips business.

Instead, the company said it was still weighing offers from three groups of investors: Bain Capital, the American investment fund, which has joined with two Japanese government-backed financial firms; Western Digital, the digital storage company based in the US; and Foxconn, the contract manufacturer based in Taiwan that makes phones and other devices on behalf of Apple (AAPL) and other global brand names.

Apple relies on Toshiba's memory chips for iPhones and iPods, and wants a continued supply so it is not dependent on rival Samsung Electronics, Bloomberg News said, quoting people familiar with the matter. "There are supply shortages of that type of memory", Michael Walkley, an analyst with Canaccord Genuity, said by phone.

"They're always looking to work closely with key suppliers and lock in long-term supply agreements", he said.

It was the second time Toshiba has missed such a deadline, The New York Times reported.

Toshiba has been in negotiations for months to sell off its chips business and pay for a disastrous move into the USA nuclear business. But those talks lapsed as Japanese government investors who had been part of that consortium told Toshiba they were reluctant to close a deal in the face of the legal risks posed by Western Digital's demands.

Negotiations for the sale of its memory chip business have dragged on for months while Toshiba needs to raise money by the March end of the current business year to avoid delisting from the Tokyo Stock Exchange. Banking sources have previously said, however, that Western Digital was working to get its proposal up to 2tn yen.

If Bain deal is approved, both Bain and Toshiba will hold 46% of the unit.

An email and voicemail message to an Apple spokesperson requesting comment were not immediately returned.

Apple is apparently ready to invest 400 billion yen, which amounts to over $3.63 billion, in a bid for Toshiba totaling 2 trillion yen, or about $18.2 billion. "This is regrettable and I am deeply sorry for the feelings this has created", Western Digital Chief Executive Stephen Milligan wrote in the letter, which was seen by Reuters.

Alternatively, a combined Toshiba and Western Digital business could be nearly as large as Samsung's memory unit, giving it more negotiating leverage against Apple.



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