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Bain Signs Letter of Intent to Buy Toshiba's Chip Business

"U.S. private-equity firm Bain Capital signed a memorandum of understanding with Toshiba Corp. Wednesday," confirms the Wall Street Journal (Sept. 13, Mattioli, Mochizuki), "saying it intends to reach a deal to buy the Japanese conglomerate's memory-chip business by the end of September." The nonbinding letter is the latest twist in a contentious sale process that most industry observers suspect is far from over. Bain is reportedly leading a group that includes Apple Inc., Seagate Technology PLC, and Dell Inc. and is offering more than $18 billion for the business. Journal sources add that South Korean chip maker SK Hynix Inc. and Innovation Network Corp. of Japan, a fund backed by the Japanese government, were also likely to join the effort. Toshiba has retained the right to negotiate with other bidders. It is seeking to unload the memory-chip unit as part of a survival plan following major losses at Westinghouse Electric Co., its U.S. nuclear unit, which filed for bankruptcy earlier in 2017.

The New York Times (Sept. 13, Soble) adds that "the chip unit is second only to Samsung Electronics of South Korea in producing so-called NAND flash memory chips, which are used to store data in smartphones and other digital devices." The business has been profitable over the years for Toshiba, which pioneered NAND technology. But the company needs cash quickly. Toshiba had already picked the Bain group as its favored buyer once before, earlier this summer. However, the selection provoked an irate response from Western Digital, which shares ownership with Toshiba of a NAND production operation in Japan. "Western Digital argued that Toshiba could not sell its chip business to an outside party without its approval," notes the Times. "