Toshiba Corp’s board has agreed to sell its chip unit to a group led by Bain Capital, with the assurance that the buyout firm will complete a deal regardless of legal challenges from Western Digital Corp, according to people familiar with the matter.
The Bain consortium includes financial support from Apple Inc, Dell Inc and several other companies, said the people, asking not to be identified because the matter is private.
Toshiba also plans to invest about ￥350 billion (US$3.1 billion) alongside the US buyout firm, they said.
Toshiba is selling off its chips business to pay for losses in its US nuclear unit Westinghouse and needs to raise the money by March next year to avoid seeing its shares delisted from the Tokyo Stock Exchange.
The auction has been complicated by legal action from Western Digital, which has argued it should have veto rights in any sale because of its partnership with Toshiba in the chips business.
Toshiba disputes that and sued Western Digital for more than US$1 billion for interfering in the auction.
Bain has agreed to close the deal even if the legal dispute with Western Digital is unresolved, one of the people said.
In that case, three joint ventures between Toshiba and Western Digital would not be transferred to Bain at closing and the purchase price would be adjusted, the person said.
The joint ventures are worth less than 5 percent of the chips unit, the person said.
Toshiba’s board agreed to the Bain proposal at a meeting yesterday.
Under the agreement, Bain, Toshiba, SK Hynix Inc and Japan’s Hoya Corp will pay about ￥960 billion for common and convertible stock, while Apple, Dell, Kingston Technology Co and Seagate Technology PLC will spend about ￥440 billion for convertible and non-convertible preferred stock, the person said.
The Bain-led group was identified as a preferred bidder almost three months ago, but the process has been delayed by lawsuits, government opposition and corporate indecision.
Bain had sought more financial support from Apple, asking for about US$7 billion in capital, up from a previous agreement for about US$3 billion, a person familiar with the matter said.
It is not clear exactly how much capital Apple will ultimately contribute to the offer.
The special purpose entity making the acquisition will be called Pangea and receive about ￥600 billion in loans, the person said.
Reuters reported earlier that Toshiba’s board had chosen Bain.
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