Toshiba signs deal to sell chip unit to Bain-led group for S$24b

Toshiba will be selling its chip unit in a 2 trillion yen (S$24 billion) - deal to Bain Capital.
Toshiba will be selling its chip unit in a 2 trillion yen (S$24 billion) - deal to Bain Capital. PHOTO: EPA-EFE

TOKYO (REUTERS) - Toshiba has signed a deal to sell its chip unit to a consortium led by Bain Capital for 2 trillion yen (S$24.1 billion), overcoming a key hurdle as it scrambles for funds to stave off a potential delisting.

The sale of the unit - the world's second biggest producer of Nand chips - was agreed last week, but the signing was delayed because consortium member Apple demanded new terms on chip supply in return for funding, sources have said.

Bain's consortium also includes South Korean chipmaker SK Hynix, as well as Dell, Seagate Technology and Kingston Technology.

Pressure from the Japanese government, changing alliances among suitors and a slew of revised bids have drawn out the auction over nine months - heightening the risk that the deal may not close before the end of Japan's financial year in March, as regulatory reviews usually take at least six months.

If the deal does not close before then, Toshiba - hurt by liabilities at its now bankrupt nuclear unit Westinghouse - is likely to end a second consecutive year in negative net worth, putting pressure on the Tokyo Stock Exchange to strip it of its listing status.

The sale also faces legal challenges from Western Digital, Toshiba's chip venture partner and rejected suitor, which is seeking an injunction to block any deal that does not have its consent.

Western Digital, one of the world's leading makers of hard disk drives, paid some US$16 billion (S$21.8 billion) last year to acquire SanDisk, Toshiba's chip joint venture partner since 2000. It sees chips as a key pillar of growth and is desperate to keep the business out of the hands of rival chipmakers.