Japan-backed group is 'preferred bidder' for Toshiba memory business

Financially troubled Toshiba chose a Japan-backed consortium as the preferred bidder for its memory business, despite Western Digital’s continuing claims that no sale can happen without its SanDisk subsidiaries’ consent.

Toshiba’s board of directors disclosed this week the selection of a consortium that includes Innovation Network Corporation of Japan (INCJ), a government-supported investment fund, Development Bank of Japan (DJB), and Bain Capital Private Equity LP.

Western Digital claimed Korea-based chipmaker SK Hynix is also part of the consortium trying to buy the Toshiba memory business. SK Hynix would provide roughly half the financing to Bain, according to unnamed sources cited in a Reuters report.

Toshiba memory business spin-off

Toshiba split off its profitable chip business on April 1 and pursued a sale to cover huge losses associated with its struggling U.S.-based Westinghouse Electric nuclear power division. The company did not disclose terms of the proposed deal, but analysts estimated the value of the Toshiba memory business at $18 billion to $20 billion, according to published reports.

Bidders for the coveted Toshiba memory business reportedly included U.S.-based chipmaker Broadcom, Taiwan-based electronics maker Foxconn, SK Hynix and Western Digital.

Toshiba claimed the consortium backed by INCJ, DJB and Bain Capital presented the optimal proposal, “not only in terms of valuation,” but also with respect to “certainty of closing, retention of employees, and maintenance of sensitive technology within Japan.”

Toshiba said it would try to strike a mutually satisfactory agreement with the consortium by June 28, the date of its annual shareholder meeting. The company said it hoped to close the transaction by March 2018.

But Western Digital Corp.  is fighting to block the deal. WD issued a statement claiming that Toshiba “continues to ignore” the consent rights of SanDisk, its NAND flash memory joint venture partner, and ongoing legal processes. SanDisk is now part of WD.

Last month, WD filed a request for arbitration and injunctive relief with the International Court of Arbitration, a Paris-based institution operated by the International Chamber of Commerce. WD sought to undo Toshiba’s April 1 transfer of their NAND flash memory joint venture interests to the Toshiba Memory subsidiary and prevent any subsequent transfer without SanDisk’s consent.

More recently, on June 15, WD sought preliminary injunctive relief in the Superior Court of California to prevent Toshiba from transferring their three NAND flash joint ventures until the arbitration case is settled. A hearing is set for July 14.