Bain consortium bids $22 billion for Toshiba chip unit as Western Digital stalls

Just over a week ago, Western Digital looked like they had sown up an unlikely deal for Toshiba’s chip unit. However, a week is a long time in business, especially where Toshiba is concerned. Failing to come to an agreement before the end of August, Western Digital regrouped to come back with a new proposal. However, in that time, a consortium lead by Bain and SK Hynix convinced Apple to get on board and have now reportedly tabled an improved $22 billion for Toshiba’s valuable NAND arm.

The offer by the consortium, which is led by the U.S. private equity group and the South Korean chipmaker as well as Japanese state-backed investors, was higher than an initial offer of around $18 billion, according to Reuters.

The move comes after a bid from Western Digital stalled in the final stages of talks. Some sources claim that Western Digital were unhappy with the terms of the agreement, while others suggest Toshiba were reluctant to put the deal through as it could lead to prolonged antitrust reviews due to their existing partnership with Western Digital.

Either way, the deal fell at the final hurdle and now Bain are back in the hunt and are again favourites to tie up the deal. Under their latest offer, Bain and SK Hynix offered to provide a combined total of around 567.5 billion yen, while Apple Inc would provide 335 billion yen, according to sources. Toshiba would keep 250 billion yen in the business, they said. Toshiba’s board is expected to make a decision on the bid on Wednesday.

Failure to clinch a deal soon, could result in Toshiba being delisted in March, with a six month window needed to get its finances in order. All of this comes in an effort to make up the $18 billion it needs pay off huge loans it has accrued. The nature of the sale has seen the Japanese government heavily involved, with emphasis being placed on keeping the firm within the country.

Toshiba’s financial woes are largely connected to its failed nuclear unit Westinghouse. Acquired in 2006, an ill-advised purchase in 2015 has led to massive scandal and loses for its parent company. Last month Westinghouse filed for a Chapter 11 bankruptcy and Toshiba is attempting to split from the company. Since revealing its financial turmoil a number of investors have shown an interest in Toshiba’s technology businesses.

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