Toshiba Agrees To Sell Its Chip Unit To Bain Capital For $18B

September 21, 2017 - Written By Dominik Bosnjak

Toshiba on Wednesday said it agreed to sell its NAND memory chip division to a consortium led by Bain Capital, marking yet another change of heart in a drawn-out saga which saw the firm clash with its long-term joint venture partner Western Digital as it struggled to liquidate its flagship unit in a bid to save the rest of the company from being delisted from the Tokyo Stock Exchange after the bankruptcy of its U.S. nuclear business Westinghouse Electric left it with a major accounting hole in early 2017. The deal itself is worth 2 trillion yen ($18 billion) and should be signed shortly, though the proper documentation has yet to be made official, Toshiba said.

The decision to sell its division was made by the majority of the company’s Board of Directors which clashed on several occasions over the matter in recent months, with some of the firm’s leadership advocating for accepting a bid from a business consortium led by Taiwanese tech giant Foxconn who gave the highest offer as part of the firm’s final bidding round. Many others were against such a move out of fear of a state intervention, with Tokyo supposedly being against Foxconn’s bid due to the company’s close ties with China. The deal will be subject to several legal motions filed against the transaction by Western Digital which still claims that Toshiba cannot sell its NAND memory chip unit without obtaining consent from its joint venture partner, citing their partnership agreement.

The Japanese tech giant and Bain Capital already signed a Memorandum of Understanding on the sale earlier this month but many of the firm’s directors were supposedly leaning toward accepting the bid from a Western Digital-led consortium shortly after that move. Both offers would raise some antitrust concerns in the Far Eastern country as the consortiums behind them are backed by chip makers that directly compete with Toshiba. Bain Capital’s group contains South Korean chipmaker SK Hynix and it’s currently unclear how likely is the Japanese government to start an antitrust investigation into the matter should the deal be signed. Such a turn of events would be a major setback for the firm which must offload its most profitable unit by the end of the year in order to avoid a stock exchange delisting and more severe consequences of its recent troubles.