Wednesday, September 13th 2017

Toshiba Updates on the Sale of Toshiba Memory Corporation

Toshiba Corporation (TOKYO:6502) (Toshiba) has entered into a memorandum of understanding (MOU) with Bain Capital Private Equity LP (Bain), the lead member of a consortium currently bidding to acquire Toshiba Memory Corporation (TMC), memorializing the parties' intent to negotiate a mutually satisfactory definitive agreement for the sale of TMC by the end of this month. The decision to enter into the MOU was made by Toshiba's Board of Directors at its meeting today.

As Toshiba stated in its August 31 announcement, "Update on the Sale of Toshiba Memory Corporation," Toshiba has been in continuing negotiations with three consortia of potential purchasers of TMC: a consortium that includes the Innovation Network Corporation of Japan, Bain and Development Bank of Japan; a consortium that includes Western Digital; and a consortium that includes Hon Hai. In the course of these negotiations Bain has come forward with a new proposal. Toshiba's Board of Directors has determined to continue negotiations with the Bain-led consortium on the basis of this new proposal, and the company will work to expedite the conclusion of a stock purchase agreement by the end of September. Toshiba hereby announces that it has accordingly entered into a non-binding MOU with Bain. The signing of this MOU does not eliminate the possibility of negotiations with other consortia.

"Toshiba intends to reach a definitive agreement that fully meets our objectives at the earliest possible date," said Dr. Yasuo Naruke, Senior Executive Vice President of Toshiba. "The sale of TMC must promote further growth of TMC's memory business, and return Toshiba group to positive equity.

Dr. Naruke further stated: "The memory business is highly time sensitive. It requires timely investments, accelerated product development, and the ability to quickly ramp-up large-scale production capacity. TMC is now proceeding with a unilateral investment in manufacturing equipment for the Fab 6 clean room at its Yokkaichi Operations, and we aim to increase the output of 3D Flash memory at Yokkaichi to approximately 90% of capacity in FY2018. Moving forward, we will continue to make timely investments to expand operations to meet growing market demand."
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9 Comments on Toshiba Updates on the Sale of Toshiba Memory Corporation

#1
FordGT90Concept
"I go fast!1!11!1!"
They're doing this is because it's the only way to keep Toshiba corporate a float to offset the losses of Westinghouse. It's sad that this pretty much the end for Toshiba.
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#2
ssdpro
FordGT90Concept said:
They're doing this is because it's the only way to keep Toshiba corporate a float to offset the losses of Westinghouse. It's sad that this pretty much the end for Toshiba.
It actually seems like the opposite. Yesterday there were reports a deal was being finalized with WD, now this MOU with the other group led by Bain. In both cases, WSJ reports the agreements are for 40% stakes in the memory chip unit. Each consortium would have a voting right/veto on the board thanks to being over 33% but control and management would remain with Toshiba. Japan is a member of each group so is making it clear they aren't letting Toshiba go anywhere.
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#4
ssdpro
As for that "Bain and SK Hynix seem to be buying their entire flash memory business for 22 billion" link, I see that article nowhere no those words at the link you gave. Perhaps it was removed. Lots of editorial writers tend to push articles like that around things like this to pump then are removed. As things change day by day from sale to A then sale to B I bet this is a long way from over. Toshiba is actually looking pretty strong considering how long they have been able to carry on without desperately entering into a deal.
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#6
StrayKAT
FordGT90Concept said:
They're doing this is because it's the only way to keep Toshiba corporate a float to offset the losses of Westinghouse. It's sad that this pretty much the end for Toshiba.
Many in Japan would still be employed with either Toshiba or WD, so I'm not so sad. Only a brand suffers.
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#7
R0H1T
FordGT90Concept said:
Oops, fixed it. Here's a similar article from Reuters on the $22 billion offer.
https://www.reuters.com/article/us-toshiba-accounting-bain-exclusive/exclusive-toshiba-favors-bain-group-for-chip-sale-western-digital-talks-stall-sources-idUSKCN1BN17Z
I assume any of this would be stock + $ in cash.
There's no way anyone pays $22 billion in cash with the way world economy is right now, even if they were to do so one would have to raise a lot of money.
Except Apple, Google, MS I don't know any other tech company that has this much cash lying around.
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#8
StrayKAT
Would it be cheaper just for WD/SD to build new facilities all on their own? Heh..

Even in the US?
Posted on Reply
#9
FordGT90Concept
"I go fast!1!11!1!"
R0H1T said:
I assume any of this would be stock + $ in cash.
There's no way anyone pays $22 billion in cash with the way world economy is right now, even if they were to do so one would have to raise a lot of money.
Except Apple, Google, MS I don't know any other tech company that has this much cash lying around.
That's why Bain is involved. SK Hynix can purchase above their station with an influx of investment cash from Bain.
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