Sale Of Toshiba's $18 Billion NAND Unit Unlikely: Report

AH Toshiba Logo 1

Representatives from both Bain Capital and Toshiba Corp. recently confirmed that both are still holding out for a decision from Chinese regulators regarding the sale of Toshiba’s NAND memory chip division. The news follows earlier reports to the contrary, fueled by claims by unnamed individuals close to the deal. According to those individuals, executives at Toshiba had begun to reopen reviews of alternative opportunities due to delays in any kind of decision from authorities. The $18 billion sale is arguably an important one for Toshiba, with the company beginning to examine its prospects early in 2017 after its U.S. nuclear business Westinghouse Electric Company filed for bankruptcy. The deal itself was set to be closed on May 1 and antitrust regulators in China have until the end of the month to reach a decision. However, the authorities have been unresponsive about the deal following growing tensions in international trade.

Meanwhile, Toshiba is not contractually bound to move forward with the deal at all as of April 1. That’s not necessarily going to lead to the deal’s demise but the company’s response to reports has spurred further feedback from the aforementioned persons close to the deal. Executives within the company have reportedly expressed disdain, saying that the deal is going nowhere or that it’s “dead.” Making matters more unstable, Toshiba managed to raise nearly a third of this deal’s sale price over the course of 2017. That puts the company in a more comfortable position and there has been speculation that Toshiba will look to renegotiate the deal. More directly, the company may try to maintain its hold on the NAND division – which is a highly profitable unit due to the chips’ use in all manner of technologies. Conversely, it may simply try to encourage a change in the conglomerate of companies backing Bain Capital’s acquisition of the unit.

Until something more concrete is announced or the Chinese authorities reach a decision, however, speculation about the deal’s prospects can’t really be justified. For the time being, neither Toshiba Corp. or Bain Capital appear ready to call off the sale and it’s not always a good idea to judge a situation on the statements of unnamed sources. Whatever the case may be, it shouldn’t be too much longer before something more official is announced about the deal.