A consortium led by SK Hynix and Bain Capital is now close to buying Toshiba’s NAND memory chip unit which the company has been trying to liquidate since early 2017, industry sources said on Tuesday, adding that the Japanese tech giant’s negotiations with a network of companies led by its long-term partner Western Digital have stalled once again, putting SK Hynix at the forefront of the race to acquire the company’s most profitable division. The latest turn of events played out 24 hours before Toshiba’s final deadline for bids which were so far launched by three consortiums – the two mentioned above, and another one led by Taiwanese conglomerate Foxconn.
The Tokyo, Japan-based company has yet to issue a concrete comment on the matter that’s been making the headlines for over half a year now; with its U.S. nuclear business Westinghouse Electric Co. filing for bankruptcy in January, the firm was left with a massive loss that it couldn’t have covered with another loan as it was and still is under sanctions over a 2015 accounting scandal. This left the company with little choice but to liquidate some of its assets in an effort to avoid being delisted from the Tokyo stock exchange, a scenario that’s likely to happen in early 2018 if the firm doesn’t secure a significant financial injection. Being by far the most profitable unit of the company, its NAND memory chip business proved to be the most suitable candidate for the sale which was originally planned as being only partial in nature. Toshiba eventually decided to liquidate the entire unit and is now seeking approximately $18 billion from the sale in order to bounce back from negative shareholder equity and consequently avoid a delisting.
Due to the current state of affairs, it’s unclear whether a Toshiba board meeting that’s scheduled for tomorrow will see the conclusion of this drawn-out saga, i.e. whether the company’s top management will finally settle on a bidder and start making moves to conclude the actual transaction which needs to go through before the end of the year. With SK Hynix being a rivaling chip manufacturer, its proposed acquisition of Toshiba’s business could also prompt an antitrust review in Japan which could additionally postpone the transaction, which is a scenario that the conglomerate is seeking to avoid at all costs.