Apple re-joins race for Toshiba chip unit

Apple is back in the hunt to buy Toshiba’s valuable memory chip unit. According to sources close to the bid, Apple has gone back to the consortium led by Bain Capital to lodge a new bid to the Japanese conglomerate. It comes as a proposed deal with Western Digital appears to have hit the buffers at the 11th hour.

Apple and Bain had both previously been interested in acquiring the unit earlier this year. However negotiations faltered after Toshiba became embroiled in a legal battle with its partner Western Digital. Following the court fallout Western Digital themselves looked the most likely suitors, with Toshiba keen to tie up a deal before the end of August.

Still keen to keep the deal alive, the head of Western Digital has apologised to Toshiba Corp’s CEO for strained ties after it sued the Japanese company to keep their memory chip joint venture from being sold to rival bidders. “I understand that the litigation and ongoing disputes have created significant ill will for some within Toshiba. This is regrettable and I am deeply sorry for the feelings this has created,” Western Digital Chief Executive Stephen Milligan wrote in the letter, which was seen by Reuters.

However, the US company is delaying the $17.5 deal with sources saying that Western Digital is unhappy with the details of the deal. According to Reuters, the two sides are yet to agree on specifics such as the size of Western Digital’s future stake in the business. While both sides are refusing to comment at the moment, Toshiba will be keen to hammer out a deal before the end of the month, or risk being delisted from the Tokyo Stock Exchange.

In June, Toshiba picked a consortium including Japanese government-backed funds, private equity firm Bain Capital and South Korean chip maker SK Hynix as the preferred bidder for the prized unit. However, Western Digital’s multiple legal challenges looked to have scuppered the deal. The subsequent legal battle between the two companies unnerved the state-backed funds, which demanded that Toshiba resolve the conflict before the sale. However, the deal with Bain Capital looks to have been given new life with the backing of Apple.

Toshiba is hoping to replenish its depleted accounts with investment of at least $18 billion for its NAND chips production unit. Losses accrued largely relate to Toshiba’s failed nuclear arm Westinghouse, which declared bankruptcy earlier this year.

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