Western Digital Bought Toshiba Memory

Ivan Schwartz
September 13, 2017

Japan's embattled Toshiba Corp 6502.T is still in discussions with various parties over the $18 billion sale of its memory chip business just a day before its latest, self-imposed deadline, people involved in the talks told Reuters on Tuesday. In addition to being a competitive force in chips, Western Digital is also the world's largest manufacturer of disk drives, competing against Seagate Technology (STX).

Toshiba is hoping to quickly sell the chip unit to cover up massive losses stemming from its now-bankrupt USA nuclear unit.

Cash-strapped Japanese industrial giant Toshiba said Wednesday it had picked a US-led consortium as the leading candidate to buy its prized chip business in a deal reportedly worth some $18 billion.

Toshiba denied the report on Tuesday by Japan media group Nikkan Kogyo that said Western Digital won the bidding process.

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Western Digital shares are up 2.03% premarket. Mizuho reiterated a buy rating on shares of Western Digital Corporation in a research report on Friday, May 19th. After months of negotiations, legal battles and boardroom meetings, Toshiba has picked the U.S. company, according to Japanese news outlet Nikkan Kogyo.

The WDC-led bid group includes the Innovation Network Corporation of Japan (INCJ), the Development Bank of Japan (DBJ) and sundry Japanese companies, including, somewhat oddly, Toshiba itself.

The report further noted that "All three bidder groups have roped in major chip buyer Apple Inc to bolster their offers, sources have said". Benchmark Co. reaffirmed a "buy" rating and issued a $135.00 target price on shares of Western Digital Corporation in a report on Thursday, September 7th.

A number of other institutional investors and hedge funds also recently modified their holdings of the business. On Saturday Patently Apple posted a follow-up report titled "The Bain, SK Hynix, Apple bid for Toshiba has been upped to $22 Billion as Decision Time Draws Nigh". Western Digital Corporation now has an average rating of Buy and an average price target of $111.34. The data storage provider reported $2.93 earnings per share (EPS) for the quarter, beating the consensus estimate of $2.51 by $0.42.

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