Bain, KKR, Broadcom among suitors lining up for Toshiba's chips business

Ivan Schwartz
May 20, 2017

People familiar with the matter told Reuters earlier on Friday SK Hynix will be part of a consortium led by US buyout firm Bain Capital LP, which seeks to buy a majority stake in the Toshiba chip business, offering around 1.5 trillion yen ($13.49 billion).

Taiwan's Hon Hai and South Korea Hynix have also expressed interest in purchasing Toshiba Memory, and returned bids as high as $27 billion, but it is believed that these groups would have a hard time gaining approval from the Japanese government. However, much of the sale and its outcome are uncertain, as Toshiba's business partner Western Digital, which jointly runs Toshiba's main semiconductor plant and is one of the suitors for the unit, is seeking to block any sale that does not have its consent.

Western Digital, which has worked alongside Toshiba in the memory business as a joint venture disputed the Japanese company's plans to spin off and sell the memory business, and recently requested arbitration through the International Chamber of Commerce.

The U.S. executives may also meet with officials at other Japanese entities, including the Ministry of Economy, Trade and Industry and the government-affiliated fund, the Innovation Network Corp. of Japan, the sources said.

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Western Digital hasn't made clear whether it will join the KKR-Japan consortium and could still make an offer on its own, the people said. Toshiba also declined to comment.

"The two firms participated in the May 19 bid together", said a source briefed on the matter. "Regarding the acquisition of management stake of Toshiba's memory unit, we chose to join the final bid in partnership with a consortium", the Korean chipmaker said in its regulatory filing Friday afternoon. SK Hynix is not expected to take a leading role in the offer due to anti-trust concerns. A representative for DBJ was not immediately available to comment.

US chipmaker Broadcom and Silver Lake did not immediately rely to requests for comment outside of regular USA business hours. The South Korean company is widely expected to suggest a price higher than 2 trillion Japanese yen (US$18 billion) proposed during the first bidding.

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