Start GRASP/Japan Toshiba Reaches Tentative Deal to Sell Microchip Unit

Toshiba Reaches Tentative Deal to Sell Microchip Unit


The board of the Japanese conglomerate is close to an agreement with a group of investors led by Bain Capital, although details must still be finalized.
TOKYO — The board of the Japanese conglomerate Toshiba has approved a plan to sell its lucrative microchip business to a group of American and Japanese buyers, bringing the company closer to a deal it may need to survive.
Details of the sale must still be finalized, Toshiba said in a statement on Wednesday, leaving open the possibility of another turn in a drawn-out bidding process marked by reversals, acrimony and confusion. But a person with knowledge of the deliberations, who asked not to be identified because the talks were not public, said Toshiba was no longer negotiating with other bidders.
The Japanese company said the microchip unit would be sold for 2 trillion yen, or roughly $18 billion. But the structure of the deal is complicated, and Toshiba said it would retain partial control of the business. It was not clear on Wednesday how much would end up being owned by outside investors.
Those investors primarily include Bain Capital, the American buyout firm, and two organizations controlled by the Japanese government, the Innovation Network Corporation of Japan and the Development Bank of Japan.
While they were the only buyers identified by Toshiba on Wednesday, others, including Apple and the South Korean semiconductor company SK Hynix, are negotiating to potentially purchase smaller stakes, the person close to the deliberations said.
The business, Toshiba Memory Corporation, is an important manufacturer of flash memory chips, which are used in millions of smartphones and other digital devices.
Toshiba needs money from the sale to repair its tattered finances. A gaping hole in its balance sheet caused by bad bets on American nuclear power projects has threatened the future of the technology company, one of Japan’s biggest and most storied.
The deal’s more convoluted elements appeared to stem from Toshiba’s desire to retain a significant degree of control over the chip business.

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