24 May 2019
Toshiba values the world's second-largest producer of NAND chips at US$18 billion or more. Photo: Bloomberg
Toshiba values the world's second-largest producer of NAND chips at US$18 billion or more. Photo: Bloomberg

Toshiba expected to name buyer of chips business June 15

Toshiba Corp. aims to name a winner for its prized semiconductor business next week, Reuters reports, citing people familiar with the matter.

Sources told the news agency the choice has narrowed to one bid from US chipmaker Broadcom Ltd. and US tech fund Silver Lake and another from Toshiba chip partner Western Digital Corp. and Japanese government-related investors.

Toshiba is rushing to find a buyer for the world’s second-largest producer of NAND chips, which it values at US$18 billion or more, to cover billions of dollars in cost overruns at its now-bankrupt US nuclear business Westinghouse Electric Corp.

The laptops-to-nuclear giant will hold a board meeting on June 15 to decide on the preferred bidder, two sources said.

Western Digital, which jointly operates Toshiba’s main chip plant in Yokkaichi, western Japan, has complicated the sale effort with a legal challenge, accusing Toshiba of a serious breach of contract over the joint venture.

It argues that the unit cannot be sold without its consent and has demanded exclusive negotiating rights.

But in a letter seen by Reuters, Toshiba struck back, again asking Western Digital to stop challenging the plans.

“Toshiba encourages Western Digital to redirect the considerable efforts that it has put into disrupting Toshiba’s sale process into more productive channels.”

The Broadcom-Silver Lake bid is attractive because of its higher price of 2.2 trillion yen (US$20 billion), sources have said.

This compares with an offer of less than 2 trillion yen from Western Digital, which could also face antitrust hurdles because the firm is the third-largest maker of NAND flash-memory chips.

“Naturally, for the Toshiba corporate side, Broadcom is the best choice,” one source said.

Other bidders include US private-equity firm Bain Capital with South Korean chipmaker SK Hynix Inc., and Taiwan’s Hon Hai Precision Industry Co. Ltd. with its Japanese unit Sharp Corp.

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