Print Edition - 2017-09-14 | MONEY
Toshiba picks US-led group for chip business sale
Sep 14, 2017-
The development was the latest twist in a long-running saga as Toshiba agonises between three groups of suitors for its lucrative chip business.
The Bain Capital-led group also includes state-backed Development Bank of Japan and the public-private Innovation Network Corp. of Japan as well as South Korean chipmaker SK Hynix.
Toshiba said its board of directors would continue talks with the Bain Capital-led group after it came up with a new proposal during the talks.
“The company will work to expedite the conclusion of a stock purchase agreement by the end of September,” Toshiba said. However, Toshiba stressed that it was a “non-exclusive” agreement that “does not eliminate the possibility of negotiations with other consortia.”
Other suitors in the frame are a group led by Western Digital, Toshiba’s US-based chip factory partner and Taiwan’s Hon Hai Precision, better known as Foxconn.
California-based Western Digital voiced disappointment but stressed it had not given up on its bid.
“We are disappointed that Toshiba would take this action despite Western Digital’s tireless efforts to reach a resolution that is in the best interests of all stakeholders,” it said in a statement.
“Our goal has been—and remains—to reach a mutually beneficial outcome that
satisfies the needs of Toshiba and its stakeholders, and
most importantly, ensures
the longevity and continued success” of the joint ventures, it said.
Selling the profitable chip division is seen as key to Toshiba’s survival, as one of Japan’s best-known firms battles to recover from multi-billion-dollar losses from US nuclear operations.
It could also face the humiliating prospect of being delisted from Japan’s stock exchange if the sale does not raise the sufficient funds by an end-March cut-off date for closing accounts.
But some analysts said Toshiba should beware of selling off the much-coveted business—which accounts for around one-quarter of Toshiba’s total annual revenue—too cheap.
Masahiko Ishino, an
analyst at Tokai Tokyo Research Centre, said he believed Toshiba does not intend to sell the entire memory chip business. “Selling the high-performing business too cheap is not in the interest of shareholders,” he told AFP.
“For shareholders, it doesn’t make sense to give
the treasure trove to someone else.”
Published: 14-09-2017 07:04