Cash-strapped Japanese industrial giant Toshiba yesterday said it had picked a consortium led by US investor Bain Capital as the leading candidate to buy its prized chip business in a deal reportedly worth about US$18 billion.
The development was the latest twist in a long-running saga, as Toshiba agonizes between three groups of suitors for its lucrative chip business.
The Bain Capital-led group also includes the state-backed Development Bank of Japan and the public-private Innovation Network Corp of Japan, as well as South Korean chipmaker SK Hynix.
Toshiba said its board of directors would continue talks with the Bain Capital-led group after it came up with a new proposal during the talks.
“The company will work to expedite the conclusion of a stock purchase agreement by the end of September,” Toshiba said.
However, the company stressed that it was a “non-exclusive” agreement that “does not eliminate the possibility of negotiations with other consortia.”
Other suitors in the frame are a group led by Western Digital, Toshiba’s US-based chip factory partner, and Taiwan’s Hon Hai Precision Industry Co (鴻海精密), better known as Foxconn (富士康).
California-based Western Digital voiced disappointment, but stressed it had not given up on its bid.
“We are disappointed that Toshiba would take this action, despite Western Digital’s tireless efforts to reach a resolution that is in the best interests of all stakeholders,” it said in a statement.
“Our goal has been — and remains — to reach a mutually beneficial outcome that satisfies the needs of Toshiba and its stakeholders, and most importantly, ensures the longevity and continued success” of the joint ventures, it said.
Selling the profitable chip division is seen as key to Toshiba’s survival, as one of Japan’s best-known firms battles to recover from multibillion-dollar losses from US nuclear operations.
It could also face the humiliating prospect of being delisted from Japan’s stock exchange if the sale does not raise the sufficient funds by an end-March cut-off date for closing accounts.
However, some analysts said Toshiba should beware of selling off the much-coveted business — which accounts for around one-quarter of Toshiba’s total annual revenue — too cheap.
Tokai Tokyo Research Center analyst Masahiko Ishino said he believed Toshiba does not intend to sell the entire memorychip business.
“Selling the high-performing business too cheap is not in the interest of shareholders,” he told reporters. “For shareholders, it doesn’t make sense to give the treasure trove to someone else.”
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
Continental AG, which makes control units for Daimler AG cars, cannot pursue antitrust claims against a group of patent owners, including Qualcomm Inc, which are seeking royalties on telecommunications technology, a federal judge in Texas ruled. Avanci LLC, a licensing pool formed by Qualcomm, Nokia Oyj, Sharp Corp and other owners of patents on technology standards, is not breaching antitrust laws when it negotiates license agreements with automakers rather than the component makers, Barbara Lynn, chief district judge for the Northern District of Texas, said in dismissing the suit in a decision posted on Friday. The licensing group charges US$15 per vehicle
Sony Corp has cut its estimated Play Station 5 (PS5) production for this fiscal year by 4 million units, down to about 11 million, following production issues with its custom-designed system-on-chip (SOC) for the new console, people familiar with the matter said. The Tokyo-based electronics giant in July boosted orders with suppliers in anticipation of heightened demand for gaming in the holiday season and beyond, as people spend more time at home due to the COVID-19 pandemic. However, the company has come up against manufacturing issues, such as production yields as low as 50 percent for its SOC, which have cut into
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s