Toshiba favors Bain group for chip sale; Western Digital talks stall


A group including Bain Capital and South Korea's SK Hynix (000660.KS) has raised its offer for Toshiba Corp's (6502.T) chip business to 2.4 trillion yen ($22.3 billion) including a 200 billion yen investment in infrastructure, sources familiar with the matter said.

"The dramatic twist in the sale process, beset by legal wrangling and revised bids, comes just a day before Toshiba's latest deadline".

Toshiba did not immediately respond to requests for comment.

The report further noted that "All three bidder groups have roped in major chip buyer Apple Inc to bolster their offers, sources have said".

A Western Digital spokeswoman also declined to comment.

Toshiba is desperate to sell the unit and cover billions of liabilities at its USA nuclear unit Westinghouse. While Western Digital is very much in the driver's seat in talks, it has made several key concessions to secure a deal that Toshiba is willing to accept and that will keep the unit out of the hands of rival chip firms, sources have said. However, Western Digital appear to have got past their stumbling block and the deal now looks set to go through.

The Bain-led group had been chosen preferred bidder in June. It would also be a remarkable victory for Western Digital, Toshiba's joint venture partner for its chip business, after relations with the Japanese firm frayed to point where other bidders were chosen first and the US firm initiated legal action that threatened to derail any deal.

On August 30th Patently Apple posted a report titled "Bain Capital along with Apple Offer Last-Ditch Bid for Toshiba's Memory Chip Business".

Meanwhile, the Hon Hai camp has proposed raising the planned stake of Sharp Corp., owned by Hon Hai, in the Toshiba unit from 10 percent to 15 percent, so that its Japanese members, also including SoftBank Group Corp., would have a joint stake of around 35 percent, more than the Taiwan firm's planned stake of 25 percent.