Published: Fri, September 01, 2017
Money | By Oscar Reynolds

Toshiba Says Deal Talks For Memory Biz Sale Still Ongoing

Toshiba Says Deal Talks For Memory Biz Sale Still Ongoing

Reuters reports that Apple has joined a consortium of investors bidding to purchase Toshiba's NAND flash chip manufacturing business before the Japanese company's self-imposed sale deadline today. The beleaguered Japanese conglomerate confirmed that it tried its best to seal a deal but failed to come to an agreement with any of the interested parties.

Toshiba's board met earlier in the day to review a $17 billion offer by a consortium led by Western Digital, as well as bids from groups led by Bain Capital and by Hon Hai Precision Industry. Toshiba said it had not narrowed the list further. "Meanwhile, Samsung is showing drive in the 3D NAND market, including building a factory dedicated to 3D NAND".

Toshiba's discussions with three separate buyer groups for its sought-after memory business are ongoing, despite efforts by the Japanese company to firm up a deal by its Thursday board meeting, according to a statement.

The Bain consortium is offering 2 trillion yen ($18.2 billion) for the unit, of which Apple would provide 300 billion yen, NHK said.

Toshiba recorded a net loss of ¥965.6 billion, the biggest by a Japanese manufacturer, in the year ended March after accruing massive losses from USA -based nuclear power unit Westinghouse Electric Co., which filed for Chapter 11 bankruptcy in March. He said Apple needed to keep as many chip suppliers as possible in the market to keep prices competitive.

A previous deal, led by Bain was chosen by Toshiba as its preferred bidder but was blocked by Toshiba over its reluctance to do a deal in the face of Western Digital's legal threats. They say the two were struggling to come to an agreement over the United States company's future stake in the business.

Toshiba, Bain, Western Digital, INCJ and Apple declined to comment.

A Toshiba spokesman said the company could not comment on details of the talks.

Meanwhile, Bain Capital resubmitted an offer, worth some $18 billion, late on Wednesday, at the last minute, bringing in Apple Inc to help bolster its bid, sources said. For now, Western Digital plans to invest only through convertible bonds.

"That clearly appeals to Toshiba's impatient lenders but there are fundamental differences to resolve and it is still some way from producing a deal that Toshiba could sign".

Failure to come to a deal soon could also mean that Toshiba might not be able to obtain necessary regulatory approvals by the end of the financial year in March. That would likely lead to Toshiba reporting negative net worth for two years in a row, increasing its chances of being delisted.

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