Published: Wed, June 21, 2017
Business | By Max Garcia

Toshiba taps consortium as preferred bidder for memory business sale

Toshiba taps consortium as preferred bidder for memory business sale

TOKYO/SEOUL A Japanese government-led consortium has told Toshiba Corp it needs to resolve its legal dispute with Western Digital Corp before it will invest in the firm's chip unit, sources briefed on the matter said. It added that Toshiba's management favours the Broadcom-led deal, but the Japan-US-Korea consortium's automatic government stamp of approval means it is also in a strong position.

Last week, Western Digital, which has invested in and jointly operates a flash memory plant with Toshiba in central Japan, said it asked a US court to block Toshiba from selling the chip unit.

The alliance includes the state-backed fund Innovation Network Corp of Japan, Development Bank of Japan and USA private equity firm Bain Capital.

However, South Korean chipmaker SK Hynix is also on board, as is the banking division of the Mitsubishi UFJ Financial Group, as the main financial backers of the consortium's buyout proposal.

The Reuters sources suggested that Toshiba's board will now vote on their preferred bidder on Wednesday.

It is fighting to counter a ¥2.2 trillion yen from USA chipmaker Broadcom and its partner, USA private equity firm Silver Lake, which sources have said Toshiba management favours.

A Toshiba spokeswoman said the company can not comment on specifics of the sale process.

Western Digital of the USA, which has acquired some SanDisk chip operations, including a joint venture with Toshiba in Japan, has said it wants to be the bidder.

Toshiba's general shareholders' meeting is June 28. Chief Executive Steve Milligan said this month that Toshiba was violating contractual rights and had left the US firm no choice but to pursue legal action. INCJ, DBJ and SK Hynix and MUFG declined to comment. Bain Capital Private Equity, based in Boston, is one of the world's leading investment firms.

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