Toshiba is selling its important chip business as it desperately tries to raise funds to prevent it being delisted from stock exchanges. The two principle bidders are rival Western Digital and a consortium led by Bain Capital and Hynix. Although reports earlier today suggested a deal had been arranged with Western Digital, an article from Reuters has revealed it is Bain’s bid that’s now being pushed through.
Toshiba had been concentrating on settling negotiations with Western Digital by tomorrow, allowing it to meet the deadline imposed by its banks. It has already missed two deadlines owing to the ongoing talks with Western Digital and Bain. Toshiba has to raise at least $18 billion from the sale so it can escape negative shareholder equity and cover the billions of dollars in liabilities incurred by U.S. nuclear subsidiary Westinghouse.
With Western Digital no longer the favoured party, the talks are likely to continue into next week. Toshiba hopes to find agreement with the Bain group in a deal expected to be worth around 2.4 trillion yen ($22 billion). The group put forward its latest offer last week, exceeding Western Digital’s $18 billion bid.
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Western Digital’s interest in the business has attracted attention from external quarters. Apple is thought to have pressured Toshiba not to sell to the company. Apple, one of the biggest buyers of Toshiba semiconductors, is concerned it would lose pricing power in the sector if Western Digital ran a combined operation with Toshiba’s business. The company reportedly threatened to stop buying Western Digital products if the deal went through.
Western Digital’s thought to have since retracted part of its bid. It now wants to become a minority investor in the business, part of a group that also includes Apple. Apple is said to have offered 50 billion yen ($460 million) to the rival group opposing Bain. It’s currently unclear how much involvement Western Digital desires to have in the business.
The Bain-led group is expected to close the agreement with Toshiba next week, according to Reuters. It had previously been the preferred bidder back in June but Japanese government investors who formed part of the group were concerned about the potential legal challenges posed by Western Digital. Bain’s now understood to be engineering a deal that will include the Japanese state investors only after arbitration with Western Digital is completed, surmounting the issue.
