Bain group 'offers $26b for Toshiba's chip unit'

TOKYO • A group led by Bain Capital and Japanese investors has offered about 2.1 trillion yen (S$26.3 billion) for Toshiba's semiconductor division, emerging as a leading bidder in the hotly contested auction, according to people familiar with the matter yesterday.

The US private equity firm has the backing of state-supported Innovation Network Corporation of Japan (INCJ) and Development Bank of Japan (DBJ), seen as essential in winning government approval for an acquisition.

Bain is also in talks with KKR, which led a rival bid, to join the consortium. Shares of Toshiba rose up to 2.4 per cent in Tokyo yesterday. The other leading contender is US chipmaker Broadcom which made an offer of about 2.2 trillion yen. Toshiba's board met on Thursday to discuss the bids and aims to pick a winner by the end of the month.

The auction has been complicated by objections from Western Digital, which jointly owns certain chip assets with Toshiba. The United States firm has sought to prevent the business falling into the hands of rivals, especially Broadcom.

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Tokyo-based Toshiba is under pressure to sell the chip unit soon and raise cash needed to pay for losses in its nuclear power business. Under the Bain bid, INCJ will contribute 300 billion yen in equity, and DBJ will contribute another 300 billion yen in preferred shares and equity, a source said. South Korean chipmaker SK Hynix will provide only loans to avoid anti-trust hurdles and contribute about half of the bidding money.

Taiwan's Hon Hai Precision Industry has also submitted a bid for the chip unit, but Toshiba is reluctant to sell to it because of its close ties to China. Founder Terry Gou has complained about the unfair process and vowed to press his case.

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A version of this article appeared in the print edition of The Straits Times on June 17, 2017, with the headline 'Bain group 'offers $26b for Toshiba's chip unit''. Print Edition | Subscribe