Toshiba closes $18B chip unit sale

Toshiba closes $18B chip unit sale

The Japanese tech has also taken a 40 per cent stake in its newly liberated chip business

Japan's Toshiba Corp said on 1 June it had completed the US$18 billion sale of its chip unit to a consortium led by US private equity firm Bain Capital, with the Japanese tech giant repurchasing a substantial stake in the business.   

The completion of the deal, initially aimed for by end-March, had been delayed due to a prolonged review by Chinese antitrust authorities. China approved the deal last month.

Prior to China’s approval, it was understood that a failure to meet a previously agreed deadline of 31 March would have given Toshiba the option of walking away from the sale of the world's No. 2 producer of NAND chips without penalty -- a move that some investors had urged it to consider.

The Bain consortium last year won a long and highly contentious battle for Toshiba Memory, the world's No. 2 producer of NAND chips. Toshiba put the business up for sale after billions of dollars in cost overruns at its Westinghouse nuclear unit had plunged it into crisis.

The consortium includes South Korean chipmaker SK Hynix, Apple Inc, Dell Technologies, Seagate Technology and Kingston Technology.

Under the deal with Bain, Toshiba repurchased 40 per cent of the unit, it said in a statement.

The closure of the deal comes after Toshiba and its chip business partner, Western Digital, agreed to settle a long-running dispute over the Japanese conglomerate's plans to sell its chip unit, removing a key obstacle to the deal, which has now closed.

With data storage key to most next-generation technologies, and demand for NAND chips booming, Western Digital, Toshiba's chip business partner and jilted suitor in the auction for the business, had threatened to block any deal without its consent.

The settlement between the two companies called for Western Digital to drop arbitration claims seeking to stop the sale to the Bain consortium in exchange for Toshiba allowing the US partner to invest in a new production line starting next year for advanced memory chips.

(Reporting by Makiko Yamazaki; Editing by Sunil Nair; Additional reporting by Se Young Lee, Ritsuko Ando, Rushil Dutta; Additional editing by Edwina Gibbs, Cynthia Osterman and Stephen Coates)

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