Apple joins Bain consortium's last-minute bid for Toshiba chip unit

Javier Howell
September 1, 2017

Reuters reports that Apple has joined a consortium of investors bidding to purchase Toshiba's NAND flash chip manufacturing business before the Japanese company's self-imposed sale deadline today.

(Toshiba backs Japanese group for memory business sale) but later switched to a Western Digital led bid.

Toshiba's relationship with Western Digital, its joint venture partner for its chip business, has been rocky throughout the auction process - to the point that other bidders were favored first while the US firm has also initiated legal action that threatens to derail any deal that does not have its consent.

The Bain consortium is offering 2 trillion yen ($18.2 billion) for the unit, of which Apple would provide 300 billion yen, NHK said. However sources have said that Western Digital is working to get its proposal up to the same figure as Bain's. Apple is said to be interested in the business because it would give it greater control over its supply chain.

Toshiba cleared the air on Thursday about the ongoing sale of its memory chip business.

Combined, Toshiba and Western Digital could be nearly as large as Samsung's memory unit, which could give a combined company more negotiating leverage against Apple.

"Apple is so big they need to multisource", said Frank Gillett, an analyst with market research firm Forrester. -South Korean Bain Capital consortium as the preferred bidder.

The Cupertino iPhone maker is in talks with Bain Capital to bid for the unit, in competition with a group that includes KKR & Co. and Western Digital Corp., according to people familiar with the matter. The company said that it alone would invest around $1.75 billion into clean room equipment for the new factory, which will manufacture 3D NAND flash to meet growing worldwide demand.

The sources declined to be identified as talks concerning the auction were private. Western Digital has also initiated legal action that threatens to derail any deal that does not have its consent.

A senior banking official familiar with the talks said Toshiba was still likely to sign a deal with the Western Digital group, as legal challenges from Western Digital, its joint venture partner for its chips business, made it hard to accept other any other offer.

"That clearly appeals to Toshiba's impatient lenders but there are fundamental differences to resolve and it is still some way from producing a deal that Toshiba could sign".

Failure to come to a deal soon could mean that Toshiba might not gain the necessary regulatory approvals by the end of the financial year in March.

Other reports by Insurance News

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