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Bain Capital's $18 Billion Acquisition of Toshiba's Chip Unit Goes Through

Toshiba Corporation announced today via a press release that China regulators have approved the sale of Toshiba Memory Corporation (TMC) to Bain Capital. The $18 billion deal was struck last year, but it was put on hold for several months as Chinese antitrust regulators were contemplating its approval.

Things were looking grim for Toshiba and Bain Capital as they were caught in the middle of the current US-China trade war. Nevertheless, China has given them the green light to proceed with the deal. Now that the necessary anti-trust approvals are in place, Toshiba and Bain Capital expect the sale it to be completed by June 1. Bain Capital said in a statement, "We are making this important investment because we see the opportunity to further grow Toshiba Memory Corporation. This transaction will help ensure a competitive global semiconductor market and protect the supply chain from potential disruption."

Toshiba: If Memory Chip Production Spin-off Fails, IPO May Be Solution

The Financial Times has reported that Toshiba is considering a last-ditch effort towards producing liquidity, should its memory chip production business spin-off to Bain Capital not be allowed to complete prior to the end of March, in the face of antitrust scrutiny delays. Should that be the case, Toshiba would be in a dire situation, as the spin-off development has clearly shown (remember that Toshiba went from a 20% stake spin-off to a 100% spin-off due to increasing concerns with the company's outstanding debt and lack of liquidity).

Should that be the case, the company is reportedly considering an IPO as one of its contingency plans, the Financial Times reports, citing sources familiar with the plans. If the acquisition by Bain Capital fails to win regulatory approval by March 31, Toshiba is no longer bound to the deal's terms, sources familiar with the situation have told Reuters. The Financial Times further added that some analysts - and Toshiba shareholders - favor this contingency plan over the existing deal - and apparently there's some sentiment towards the same in the financial markets at large, as Toshiba shares hit a three-month high in morning trade, at one point rising as much as 4.7 percent, after these IPO plans started being made public. If Toshiba's board wasn't considering an IPO before, they sure are more likely to do so now.

Toshiba to Prepare New Semiconductor Fabrication Facility in ¥7b Investment

Toshiba Corporation today announced that it is going ahead with a forward-looking plan for a new memory fabrication facility in Kitakami, Iwate prefecture. Toshiba Memory Corporation (TMC), a wholly owned subsidiary of Toshiba, will establish a company to operate the facility, and invest approximately 7 billion yen in site preparation and initial construction work in FY2017. The new facility, announced on September 6, 2017, will produce BiCS Flash, TMC's proprietary flash memory. It will be TMC's seventh fab.

Toshiba and WD Reach Global Settlement and Agree to Strengthen Collaboration

Toshiba Corporation, Toshiba Memory Corporation, and Western Digital Corporation have entered into a global settlement agreement to resolve their ongoing disputes in litigation and arbitration, strengthen and extend their relationship, and enhance the mutual commitment to their ongoing flash memory collaboration.

As part of this agreement, TMC and Western Digital will participate jointly in future rounds of investment in Fab 6, the state-of-the-art memory fabrication facility now under construction at Yokkaichi, including the upcoming investment round announced by Toshiba in October 2017. Fab 6 will be entirely devoted to the mass production of BiCS FLASH, the next-generation of 3D flash memory, starting next year. TMC and Western Digital similarly intend to enter into definitive agreements in due course under which Western Digital will participate in the new flash wafer fabrication facility which will be constructed in Iwate, Japan.

The parties will strengthen their flash memory collaboration by extending the terms of their joint ventures. Flash Alliance will be extended to December 31, 2029 and Flash Forward to December 31, 2027. Flash Partners was previously extended to December 31, 2029.

Sale of Toshiba Memory Corporation Approved by Toshiba's Shareholders

Toshiba Corporation today held an extraordinary shareholders' meeting where Toshiba's shareholders approved the Share Purchase Agreement (SPA) previously entered into with K.K. Pangea (Pangea), a special purpose acquisition company formed by the consortium led by Bain Capital Private Equity, LP (including affiliates of Bain), for the sale of all shares of Toshiba's wholly-owned subsidiary Toshiba Memory Corporation (TMC).

SanDisk LLC, a wholly owned subsidiary of Western Digital Corporation, and certain of its subsidiaries have filed for arbitration before the International Chamber of Commerce (ICC) International Court of Arbitration regarding the sale. Despite SanDisk and Western Digital's opposition, Toshiba remains fully determined to resolving the issue through the arbitration process, and looks forward to receiving the arbitrators' decision.

Since signing of the SPA on September 28, 2017, Toshiba and Pangea have been jointly working towards the closing of the transaction by the end of March 2018. Today's approval of the SPA by Toshiba's shareholders is an important step towards closing.

Toshiba Sells its Memory Business to Bain Capital for $18 Billion

Toshiba today announced that it has signed an agreement with a consortium led by Bain Capital to sell its memory business for JPY 2 trillion (approximately USD $18 billion). The consortium includes Korean memory giant SK Hynix, which contributed JPY 395 billion (nearly 20 percent) of the consortium's investment toward acquisition of Toshiba Memory Corp. Apple and Dell are the other members of the consortium.

Toshiba Corporation (erstwhile parent of Toshiba Memory Corp.) continues to hold a 40.2 percent stake, which along with another Japanese company, Hoya Corporation, holding a 9.9 percent stake, ensure that Japanese firms hold 50.1 percent of the business, keeping Japanese regulators happy. The Bain Capital-led consortium will hold a 49.9 percent stake, ensuring that Toshiba Memory Corp. stays afloat, and away from rival Western Digital, which has dragged Toshiba to a multitude of international courts and arbitrators. Apart from SK Hynix, the Bain Capital-led consortium includes Apple and Dell, who feared they would lose DRAM and NAND flash price bargaining power if Toshiba Memory fell in the hands of Western Digital, which owns SanDisk.

Toshiba Elects Bain Capital as Preferred Bidder for its Entire Memory Business

The light is being seen at the end of the tunnel for one of the tech world's most recent debacles. A series of questionable investments and accounting scandals saw Toshiba facing losses in the billions of dollars and see its stock pricing plummet by more than 40%. As such, to staunch the bleeding, the company was looking to only spin-off a 20% stake in its memory business; however, as its finances continued to take a turn to the worse, it then decided on selling a majority, 60% stake to the highest bidder. That would seemingly still not be enough, however, as the company will now sell 100% of its memory semiconductor business to investment consortium Bain Capital.

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.

WD Comments on Toshiba's Statement Regarding NAND Flash-Memory JV

Western Digital Corp. (NASDAQ: WDC) today commented on Toshiba Corporation's ("Toshiba") statement regarding the transfer of its interests in its NAND flash-memory joint ventures operated with Western Digital's SanDisk subsidiaries ("JVs"):

"We are disappointed that Toshiba would take this action despite Western Digital's tireless efforts to reach a resolution that is in the best interests of all stakeholders. Throughout our ongoing dialogue with Toshiba, we have been flexible, constructive and have submitted numerous proposals to specifically address Toshiba's stated concerns. Our goal has been - and remains - to reach a mutually beneficial outcome that satisfies the needs of Toshiba and its stakeholders, and most importantly, ensures the longevity and continued success of the JVs.

Furthermore, it is surprising that Toshiba would continue to pursue a transaction with a consortium led by Korea-based SK Hynix Inc. and Bain Capital Japan without SanDisk's consent, as the language in the relevant JV agreements is unambiguous, and multiple courts have ruled in favor of protecting SanDisk's contractual rights. We remain confident in our ability to protect our JV interests and consent rights."

Toshiba Elects Preferred Bidder for Its Memory Business Sale

The Japanese Toshiba have been in a sort of bad run lately, following disastrous investments into nuclear plants and a $1.2 billion "mistake" in their earnings reports, which gave the company a hard time in refinancing itself in the Tokyo Exchange. Now, in a bid to sell a 20% stake of their highly successful memory business, the company has elected a preferred buyer. And in what might not come as a surprise, they elected a US-Japan consortium led by the Japanese government itself.

Toshiba said it selected the consortium, consisting of Innovation Network Corporation of Japan (a 26-strong network which includes Sony, Canon and Toyota, among others), Bain Capital Private Equity LP (based in Boston) and the Development Bank of Japan, because it presented "the best proposal in terms of valuation and respect" to "certainty of closing, retention of employees" and I quote again, "maintenance of sensitive technology within Japan". Terms of the deal were not disclosed although analysts have previously estimated Toshiba Memory Corporation to be worth around $20 billion. In its announcement, Toshiba said it intends to reach an agreement for purchase with the consortium before its annual shareholders meeting on June 28. If all goes well, the Japanese tech giant is looking to close on the transaction by March 2018, pending regulatory approval and so forth.

3Com Sold in $2.2 Billion Deal

Networking company 3Com announced Friday that it will be acquired by private equity company Bain Capital and former joint-venture partner Huawei Technologies in a $2.2 billion cash deal. Under the terms of the deal, 3Com shareholders will get $5.30 in cash per share, representing a 44 percent premium over 3Com's September 27 Nasdaq closing price of $3.68.
3Com has a strong competitive position, and we believe there are significant opportunities to grow by acquiring customers and introducing new products,
Jonathan Zhu, a Bain Capital managing director based in Hong Kong, said in a statement.
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