Toshiba has announced that it's entering negotiations with a bidding group led by American investment capital company Bain Capital to purchase its silicon manufacturing business over objections from manufacturing partner Western Digital. Bain's group also includes South Korean chip manufacturer SK Hynix and a pair of investment groups backed by the Japanese government. The group's offer is reportedly worth ¥2.4 trillion (about $22 billion), including ¥200 billion ($1.8 billion) earmarked for infrastructure. Toshiba had previously chosen a Bain-led group of investors in June before lawsuits from WD apparently spoiled the deal.
Toshiba is selling its profitable NAND-making arm after sustaining enormous losses in its American nuclear power business. The company is currently the second-largest manufacturer of NAND flash silicon used in PC SSDs and smartphones, just behind Korean rival Samsung. WD and Toshiba are manufacturing partners with a joint venture in NAND flash chip development and production. WD isn't happy with this development, as it believes that a potential sale of Toshiba's chip making operations to a competitor may violate terms of the its joint venture with the Japanese company.
Bain's current investment group includes SK Hynix, the world's second largest DRAM maker, as well as the Innovation Network Corp of Japan and the Development Bank of Japan, a pair of investment groups controlled by the Japanese government. There's a third investment group interested in Toshiba's NAND business that's led by Taiwanese electronics manufacturer Hon Hai Precision Industry Co, better known as Foxconn.
Toshiba is eager to close a deal before the end of March. If a deal cannot be reached, the company may be forced to report a negative net worth for a second consecutive year, a scenario that could result in the company being de-listed from the Tokyo Stock Exchange. Some outlets reported yesterday that Toshiba and WD reached an agreement to sell the silicon manufacturing business to the American storage technology company. Those reports appear to have been premature, given the current Memorandum of Understanding between Toshiba and Bain's group.