3 groups vying for Toshiba's prized chip unit

The Japanese conglomerate said in a statement following a board meeting that it "has not made any decision to reduce the pool of candidate purchasers" of Toshiba Memory Corp. and is still continuing negotiations with three consortiums - Western Digital Corp. -led group, a Japan-U.S. The beleaguered Japanese conglomerate confirmed that it tried its best to seal a deal but failed to come to an agreement with any of the interested parties.

The company confirmed it's in talks with three consortia: one involving Innovation Network Corp of Japan, Bain Capital and Development Bank of Japan; one including Western Digital; and one including Hon Hai.

It's thought Apple could be looking to invest in Toshiba's memory business to help cover a shortage of the memory chips it uses in its iPhones and iPads.

Reports quoting sources familiar the matter said the sale process is dragging mainly because of differences between Toshiba and Western Digital over the deal process. "Meanwhile, Samsung is showing drive in the 3D NAND market, including building a factory dedicated to 3D NAND".

Toshiba has been scrambling to sell its flash memory unit to cover billions in losses at its bankrupt United States nuclear business, Westinghouse.

The plan reportedly suggested bringing Apple Inc. into the bidding group, with an offer of around ¥2 trillion. Western Digital would loan money for the initial purchase with rights to take a minority equity stake in the future, the people said.

Selling the profitable chip division is seen as the key to cash-strapped Toshiba's survival as one of Japan's best-known firms struggles to plug multibillion-dollar losses at its USA nuclear power division, Westinghouse Electric.

Apple has joined a consortium of companies led by the investment firm Bain Capital in a revised [$18 billion] last-ditch offer for Toshiba's chip unit. Toshiba would also keep a share of the business and contribute about 200 billion yen to the deal.

A previous deal, led by Bain was chosen by Toshiba as its preferred bidder but was blocked by Toshiba over its reluctance to do a deal in the face of Western Digital's legal threats.

Bain's new offer is created to get around that problem as it will invite the state-backed investors - the Innovation Network of Japan (INCJ) and the Development Bank of Japan (DBJ) - to invest in the business only after any arbitration with Western Digital is settled, the source said.

A Toshiba spokesman said the company could not comment on details of the talks.

Toshiba, Bain, Western Digital, INCJ and Apple declined to comment.

Toshiba wants to reach a deal soon and it is not clear if it will give serious consideration to Bain's new proposal.

Toshiba was working under creditor pressure to strike a deal by the end of the month, sources with direct knowledge have said, as any later would make it hard to gain regulatory approvals before its books closed in March. In the last few days relations between Toshiba and Western Digital have improved according to local reports.

  • Eleanor Harrison