Friday, September 1, 2017

Toshiba Locked in Negotiations Over Memory Chip which is up for sale in an attempt to cover billions in losses from its bankrupt Westinghouse the U.S.nuclear division

(Image courtesy of Toshiba).
Toshiba cleared the air on Thursday about the ongoing sale of its memory chip business. Still in the running are groups led by Western Digital, Hon Hai Precision Manufacturing, and Bain Capital and two Japanese government-backed funds.
Toshiba said that none of the bidders had taken pole position in the auction: “At this point, Toshiba has not made any decision to reduce the pool of candidate purchasers,” the company said in a statement. “The negotiation with each consortium has not reached a point which will allow Toshiba’s board of direction [to] make a decision.”
Western Digital remains in contention despite months of brawling Toshiba in court over the fate of the world’s second largest memory business. In recent months, the legal battles have spilled out into public view and hampered the auction. Reuters reported on Monday that Western Digital had taken the top spot at the negotiating table.
The companies have been legally sparring since Toshiba announced the sale of its memory business in April to patch devastating losses in its nuclear power unit. Western Digital claims that it has final say on any deal since it has agreed to build a flash memory chip plant with Toshiba in Yokkaichi, Japan.
Toshiba disagrees, and it has attempted to cut out Western Digital from the chips produced in the factory. The company said that it alone would invest around $1.75 billion into clean room equipment for the new factory, which will manufacture 3D NAND flash to meet growing worldwide demand. Western Digital says that it will not be forced out.
The announcement does not mention Apple, which Bloomberg reported on Wednesday is in talks with Bain Capital to submit an additional bid. Bain previously led a $19 billion bid in cahoots with SK Hynix, Innovation Network of Japan, and Development Bank of Japan, according to Bloomberg.
In June, Reuters reported that this coalition was the preferred bidder for the business. But that apparently changed on Monday when Reuters reported that Toshiba would accept a $17.4 billion bid submitted by Western Digital, American private equity firm KRR, and as well as the two state-backed funds that had previously allied with Bain Capital.
The recent announcement heaps more confusion onto the auction. Toshiba said that it is seeking a buyer “to promote further growth of TMC’s memory business, while also being capable of contributing enough value from the sale of TMC to return Toshiba to positive equity.”
“The memory business requires timely investments, accelerated product development, and the ability to quickly ramp-up large-scale production capacity,” Toshiba added in the statement on Thursday. “Highly reliable memory devices are essential to meet growing demand for storage.”
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