Japan’s Toshiba Corp said on Thursday it had signed an US$18 billion deal to sell its chip unit to a consortium led by Bain Capital LP, overcoming a key — albeit not its last — hurdle as it scrambles for funds to stave off a potential delisting, Reuters reports.
But in an inauspicious sign, a Tokyo news conference on the deal was canceled, with Bain saying the consortium could not form a consensus on whether to brief media — underscoring fears that the eight-member group contained too many competing interests for it to work well.
The sale of the unit — the world’s second biggest producer of NAND chips — was agreed last week after a tortuous auction process but the signing was delayed because consortium member Apple Inc. demanded new terms on chip supply, sources familiar with the matter have said.
Although the news conference was canceled just minutes before it was due to begin, the head of Bain Capital in Japan, Yuji Sugimoto, said the disagreements over the briefing had no bearing on the contract. He did not disclose which members had objected to the news conference.
The deal, which must also overcome legal challenges, will see Toshiba reinvest in the unit and together with Hoya Corp, a maker of parts for chip devices, Japanese firms will hold more than 50 percent of the business — a keen wish of the Japanese government.
A Japanese state-backed fund and bank have also expressed their interest in investing in the future subject to certain conditions, Toshiba said in a statement.
Pressure from the Japanese government, changing alliances among suitors and a slew of revised bids has drawn out the auction over nine months — heightening the risk that the deal may not close before the end of Japan’s financial year in March as regulatory reviews usually take at least six months.
If the deal does not close before then, Toshiba — hurt by liabilities at is now bankrupt nuclear unit Westinghouse — is likely to end a second consecutive year in negative net worth, putting pressure on the Tokyo Stock Exchange to strip it of its listing status.
The sale also faces legal challenges from Western Digital, Toshiba’s chip venture partner and rejected suitor, which is seeking an injunction to block any deal that does not have its consent.
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