Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康), is pressing its case to acquire Toshiba Corp’s memory chip unit, as the Japanese conglomerate struggles to complete the sale and avoid having its shares delisted from the Tokyo Stock Exchange.
Hon Hai has broad support for its offer from Apple Inc, Softbank Group Corp and Sharp Corp and is ready to proceed right away, Hon Hai spokesman Louis Woo (胡國輝) said.
He declined to specify how much the company is offering for the business, but people familiar with the matter have previously said it is bidding more than the two rival groups led by KKR & Co LP and Bain Capital LP.
“The bid speaks for itself. It is deal certainty,” Woo said.
“What this customer consortium means is that it will provide steady funds to Toshiba to advance their R&D [research and development]. At the same time, it’s a guarantee there will be more customers lining up to buy their products when they increase their capacity or have better products,” he added.
Toshiba is still negotiating with three groups in the auction of its most valuable business, after failing to secure a final deal with the preferred bidder it selected in June.
The effort has been hampered by political opposition and litigation from partner Western Digital Corp.
Japanese government officials have opposed selling the chip unit to Hon Hai because of the firm’s close ties to China.
CUSTOMER BID
Woo detailed the proposed ownership to make the case it is not a Chinese or even Taiwanese bid.
Hon Hai would hold 25 percent of the equity, Apple 20 percent, Kingston Technology Co 20 percent, Sharp 15 percent, Softbank 10 percent and Toshiba would keep 10 percent, he said.
“We just hope the board directors of Toshiba will make [a] decision on commercial terms, on business terms, on technology terms, rather than political terms,” the spokesman said.
The Bain-led group had previously submitted a ￥2.1 trillion (US$19.3 billion) bid, while the KKR-led consortium is offering about ￥2 trillion, according to people familiar with the matter.
Woo also made the case that Toshiba is risking its future by delaying.
Besides the risk of delisting, he said that Toshiba’s chip business will fall behind if it cannot make investments quickly.
He specifically pointed to Samsung Electronics Co’s announcement last month that it will invest US$7 billion on a new fabrication facility in Xian, China, as a warning shot for Toshiba.
Samsung is the world’s largest producer of memory chips.
“You are jeopardizing your future, you are jeopardizing your competitiveness,” Woo said.
The Hon Hai-led group consists of customers that he said will help create long-term, stable demand for memory chips, while the other consortiums are led by bankers who will look to cash out, he said.
“We are offering something that I don’t think anyone can refuse,” Woo said.
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