Toshiba Inks Acquisition Deal with <span style='color:red'>Bain-led</span> Group
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Toshiba Inks Acquisition Deal with Bain-led Group

　　Toshiba Corp. said it inked an $18 billion agreement to sell its semiconductor business to the consortium led by private equity firm Bain Capital — a deal structured to proceed even if Toshiba is still engaged in litigation and arbitration with Western Digital Corp. on the matter.　　However, Toshiba added that the sale will not be consummated if the shares of Toshiba Memory Corp., the subsidiary it established to facilitate the sale of the chip business, is blocked by an injunctive order. Western Digital has said it will seek such an order and that a decision could be handed down early next year.　　Western Digital and Toshiba are engaged in litigation in multiple venues and arbitration at the International Chamber of Commerce on the question of whether Toshiba can transfer assets used in the joint ventures between the firms to a third party. Western Digital, which last year acquired SanDisk, Toshiba's longtime partner in NAND flash memory development and manufacturing, maintains that the agreements specify that Toshiba cannot sell the assets without its permission.　　Western Digital said earlier this week that an arbitration request it filed in May seeks an injunction that would require Toshiba to unwind the transfer of its semiconductor assets to Toshiba Memory and prevent Toshiba from selling the assets until the matter is resolved. A ruling on the request for an injunction is not expected until early next year, Western Digital said.　　Western Digital tried for months to hammer out a deal to acquire Toshiba Memory along with partners, but lost out to the Bain-led consortium. Toshiba board members were reportedly concerned about the size of the stake that Western Digital might ultimately hold in Toshiba Memory.　　The legal tussle between Toshiba and Western Digital may jeopardize the longstanding partnership between Toshiba and SanDisk if the sale to the Bain-led group is consummated. But Jim Handy, principal analyst with market research and consulting firm Objective Analysis, believes that a deal would not necessarily spell doom for the partnership.　　"If you pull it apart, the people that approved the consortium's offer, they are Toshiba Corporation, not Toshiba Memory," Handy said. "These are not the people that SanDisk and Western Digital are going to be dealing with. The JV could hold together because their might be a very good relationship between SanDisk and Toshiba Memory."　　But Handy points to something else that may undermine the joint venture and Toshiba Memory. The Nikkei news organization reported last week that the bidding process over Toshiba Memory has paralyzed the unit and caused employees to bolt for competitors including South Korea's Samsung Electronics and sk Hynix.　　"The rank and file Toshiba employees have lost faith in management," Handy said. "Meanwhile you have China's Yangtze River Storage Technology dangling huge incentives at established NAND flash manufacturers to get them to defect. The longer this is unsettled, the more likely it is that there will be people who flee from Toshiba."　　The Bain-led consortium also includes sk Hynix as well as several Japanese and U.S. firms.　　Under the structure of the agreement announced Thursday (Sept. 28), Japanese firms will hold more than 50 percent of the common stock in the new firm — an important consideration for the Japanese government. Toshiba itself will provide about 18 percent of the capital for acquisition and would hold about 40 percent of the shares. Japanese photomask maker Hoya Corp. will provide about 1 percent of the funding but own about 10 percent of the shares, according to the terms of the deal.　　A group of U.S. firms — including Apple, Dell, Seagate Technology and Kingston Technology — would provide about 21 percent of the funding but would not acquire any common stock or voting rights in the firm under the terms of the deal.　　Handy called the structure of the deal — in which Japanese firms get a sizable percentage of the voting rights in exchange for a relatively lower level of investment — "a very Japanese thing to do." But he said that he was surprised that Bain would agree to such a structure.　　"Bain probably wants to find a way to get a quick return," Handy said. "They are probably already lining up someone that is going to acquire their share or they believe the stock price is depressed enough that they will get a quick return."　　Toshiba said sk Hynix would be "firewalled" from accessing proprietary information about Toshiba Memory and would not be permitted to own more than 15 percent of the common stock or voting rights in the venture for a period of 10 years. Hynix will provide about 20 percent of the funding for the acquisition, according to the terms of the deal.　　A special purpose acquisition vehicle known as Pangea, formed and controlled by Bain Capital, intends to finance about 30 percent of the purchase price of Toshiba Memory through obtaining about 600 billion yen (about $5.3 billion) in loans from financial institutions and banks, Toshiba said.　　Innovation Network Corp. of Japan (INCJ) — a public-private partnership between the Japanese government and 19 Japanese corporations — and the state-backed Development Bank of Japan will not initially participate in the acquisition consortium, but "have expressed interest in investing" at a later time, Toshiba said. These organizations have been weary of the legal challenges posed by Western Digital, and Toshiba said last week that they would invest in the venture after the arbitration and litigation is resolved.　　Toshiba said it hopes to close the deal by the end of its fiscal year in March 2018.
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Release time：2017-09-29 00:00 reading：1442 Continue reading>>
Toshiba Agrees to Sell Chip Unit to <span style='color:red'>Bain-led</span> Group
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Toshiba Agrees to Sell Chip Unit to Bain-led Group

　　Toshiba said it signed an agreement to sell its semiconductor unit to a consortium led by private equity firm Bain Capital for about $18 billion, the latest twist in a months-long saga over the Japanese conglomerate's effort to sell its prized NAND flash business to offset massive losses incurred by its U.S. nuclear power subsidiary.　　Toshiba said the deal is based on the premise that the sale would move forward even if courts impose an injunction against Toshiba in response to legal challenges brought by Western Digital, the parent company of Toshiba's long-time partner in the NAND flash business, SanDisk.　　The deal, agreed to by Toshiba's board of directors at a meeting Wednesday (Sept. 20), came just hours after the Retuers news service, citing anonymous sources, reported that Toshiba was once again leaning toward accepting a rival bid from Western Digital.　　Toshiba said it hoped to sign a final agreement "soon" in hopes of closing the sale by the end of its fiscal year in March. However, it is unclear how the legal action brought by Western Digital — which contends that Toshiba needs SanDisk's permission to sell the unit — would affect the potential sale.　　Western Digital said in a statement that it was "disappointed Toshiba would take this action despite Western Digital’s tireless efforts to reach a resolution that is in the best interests of all stakeholders."　　Western Digital also reiterated that it expected to win its arbitration against Toshiba at the International Chamber of Commerce. The company said the cases "continue to move forward," but did not say when it expects the arbitration hearing.　　"The arbitration process is ongoing and there is no specific calendar set, but the company will provide updates as appropriate," a spokeswoman for Western Digital said in an email exchange with EE Times.　　The Western Digital statement read, in part, "It is troubling that Toshiba would pursue this transaction without SanDisk’s consent, as the language in the relevant JV agreements is unambiguous, and courts have entered multiple rulings in favor of protecting SanDisk’s contractual rights. Toshiba has also acknowledged and validated SanDisk’s legitimate consent rights on multiple occasions."　　A California court ordered in July that Toshiba must provide Western Digital with at least 14 days of notice prior to close the sale.　　Toshiba and SanDisk have been partners in NAND technology development and manufacturing since the late 1990s. The relationship has been strained in recent months as Toshiba has been in negotiations to sell the business to multiple parties, including the Bain-led group and another led by Taiwanese contract manufacturing giant Hon Hai Precision, which operates under the trade name Foxconn.　　A consortium led by Western Digital also submitted multiple bids in order to win the business. Toshiba's board reportedly has been wary of selling to Western Digital because of possible antitrust issues that could lead to prolonged review of the deal and concern about the size of the stake in Toshiba Memory Corp. that Western Digital would ultimately hold.　　The Bain consortium also includes the involvement of both Apple Inc and Dell Inc. as well as South Korean memory chip vendor sk Hynix. According to a report by the Nikkei news service, the deal is structured so that state-backed entities Innovation Network Corp. of Japan (INCJ) and the Development Bank of Japan can participate in funding after the potential litigation with Western Digital is resolved.　　The consortium led by Western Digital's latest bid was also reportedly about $18 billion and included limits on the size of Western Digital's stake in the business, according to the Reuters news service.　　The bidding war over Toshiba's chip unit comes during a year when NAND flash is in tight supply and sales are up dramatically. Toshiba is the No. 2 supplier of NAND, trailing only South Korea's Samsung.　　Toshiba said it selected the Bain-led consortium's mid based on multiple factors, including its valuation of Toshiba Memory, impact on customers and probability of obtaining regulatory approval.　　Toshiba also raised questions about the future of the collaboration between Toshiba Memory and SanDisk, saying it intends to consult with Western Digital "earnestly" about the prospects for continued cooperation in the future.　　Toshiba announced last month it would go it alone in investing in equipment for Fab 6 at its Yokkaichi operations site. Western Digital said Wednesday that this also constituted a breach of the JV agreement between the firms and said it had filed an additional request for arbitration with the International Chamber of Commerce on the matter.
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Release time：2017-09-21 00:00 reading：1193 Continue reading>>
Toshiba Hopes to Finalize Chip Unit Sale to <span style='color:red'>Bain-led</span> Group
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Toshiba Hopes to Finalize Chip Unit Sale to Bain-led Group

　　Toshiba said it signed a non-binding agreement with a consortium of bidders led by private equity firm Bain Capital, signaling its intent to finalize an agreement on the sale of its semiconductor business by the end of this month.　　Toshiba (Tokyo) said its board signed a memorandum of understanding (MOU) with the Bain-led group Wednesday (Sept. 13), but that the MOU does not preclude continued negotiations with other groups, including the consortium led by Western Digital and another led by Foxconn.　　Toshiba — which is desperate to sell of its lucrative NAND flash memory business to offset losses by its U.S. nuclear power business — said it has been in continued discussions with all three groups for weeks, but decided to further negotiations with the Bain group on the basis of that group's latest proposal. According to the Reuters news service, that proposal is worth about $22 billion, more than the $18 billion Toshiba originally hoped to fetch for the unit.　　Reuters, citing anonymous sources, also reported that the new bid is structured to allow consortium members Innovation Network Bank of Japan (INCJ) and the Development Bank of Japan to invest only after pending arbitration with Western Digital has been resolved. Toshiba had selected the Bain-led group as its preferred business in June, but talks reportedly collapsed after INCJ and the Development Bank of Japan — both of which are backed by the Japanese government — balked when Western Digital initiated legal action.　　Western Digital has said that the structure of the joint ventures between its subsidiary, SanDisk, and Toshiba precludes Toshiba from selling the memory business without its approval. Western Digital repeated this claim in a statement released Wednesday, adding that it was disappointed that Toshiba signed the MOU with the Bain-led group.　　The Western Digital statement read, in part: "It is surprising that Toshiba would continue to pursue a transaction with a consortium led by Korea-based SK Hynix Inc. and Bain Capital Japan without SanDisk’s consent, as the language in the relevant JV agreements is unambiguous, and multiple courts have ruled in favor of protecting SanDisk’s contractual rights. We remain confident in our ability to protect our JV interests and consent rights."　　Toshiba's statement on the MOU did not mention SK Hynix, though the Reuters report indicated that SKy Hynix remains part of the consortium. Under the earlier proposal by the Bain-led group, SK Hynix was to provide financing and eventually gain a minority stake in the chip unit. This had reportedly been another sticking point in negotiations due to fears that the involvement of the South Korean chip firm would increase antitrust scrutiny.　　Reuters reported Wednesday that SK Hynix's role in the consortium remains providing financing, but added that it was unclear if the chip firm hoped to gain a stake in Toshiba Memory in the future.　　Toshiba is eager to conclude the sale of the chip unit by March to prevent Toshiba's potential delisting from the Tokyo Stock Exchange.　　Toshiba is the second largest supplier of NAND flash memory, with market share of about 18 percent in the second quarter, according to market watcher DRAMeXchange.
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Release time：2017-09-14 00:00 reading：1268 Continue reading>>

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