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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 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.
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