Toshiba Corp. announced its discussions with three associations for its memory chip unit and hadn’t decided to go with any buyer yet. The three groups include Hon Hai Precision Industry Co. Western Digital Corp and the Innovation Network Corporation of Japan and Development Bank of Japan respectively.
In a statement Thursday, Toshiba disclosed it hasn’t been able to announce a winner although the firm has gone a long way in reaching an agreement with one of the groups.
The electronics firm has been bent under negotiations to offset the losses in its U.S nuclear business worth several billion dollars by selling off its chip businesses. In June, Toshiba announced the group led by Bain as the preferred bidder, but Western Digital opted for legal actions which have kept the whole thing pending.
Toshiba’s urgent need for money
Toshiba shouldn’t exceed March in its pursuit to raise the money if they still want to remain in Tokyo Stock Exchange list. Further delay could be harmful, and Toshiba needs to seal the deal quickly.
An Analyst at Ace Research Institute, Hideki Yasuda said Toshiba needs to reach an agreement in September in a bid to fix the antitrust approvals, but it seems they are not set to sell their chips business. Yasuda added that Toshiba can still retain the business if they are not bothered about being delisted, and still thrive.
Toshiba stated that any bidder that ends up winning the contract would be able to pay up to fix Toshiba’s balance sheet as well sponsor large capital investment in the newly purchased business. It added that the successful bidder should be able to decide on things quickly, as well in a flexible manner. However, the Japanese firm says it hopes to reach an agreement soon.
The bid so far
Western Digital is willing to give out about 2 trillion yen to have the business, and Hon Hai founder Terry Gou has indicated his readiness to pay up to 3 trillion yen. On the other hand, Bain Capital had given out a 2.1 trillion yen offer with Development Bank of Japan and INCJ.
Apple Inc. is stepping into the bid and is discussing with Bain Capital. According to close sources this week, Apple doesn’t want to be dependent on its rival Samsung Electronics Co. As such, it’s working hard to maintain its flash memory dependence on Toshiba in its iPods and iPhones.
In the past few weeks, the Ministry of Economy, Trade and Industry in Japan had urged Toshiba to go with the Western Digital consortium’s offer in a bid to end the delay and seal a deal. However, the top officials at Toshiba are rejecting the present offer, stating that it’s not good enough to protect the chip unit’s interest or the parent.