Toshiba, keen to seal $18 billion chips sale, wrestles with last-minute delays

The logo of Toshiba Corp is seen behind cherry blossoms at the company's headquarters in Tokyo Japan

Toshiba's board signed off Wednesday on selling its computer chip business to a group led by Bain Capital Private Equity, but the deal's future remains unclear as Toshiba's USA joint venture partner Western Digital opposes it.

Toshiba wants to wrap up the sale of its memory unit by the end of its fiscal year next March to fill a massive hole in its balance sheet generated by losses from its US nuclear arm. A Western Digital spokeswoman said the company did not have an immediate comment.

Bloomberg is reporting that Toshiba is prepared to complete this deal even before resolving the legal disputes with Western Digital, by excluding the joint venture assets at issue from the sale and amending the purchase price to compensate. Toshiba will negotiate exclusively with the group to quickly seal a deal. But Western Digital immediately said it opposed the sale of the NAND flash-memory SanDisk joint venture, stressing it will continue with legal action.

It is unclear how long the process could last, and what impact it would have on the completion of the sale.

The business, Toshiba Memory Corporation, is an important manufacturer of flash memory chips, which are used in millions of smartphones and other digital devices.

In a last-minute offer, the Western Digital-led group had said it would give up seeking voting rights in the chip unit after initially demanding more than one-third of the rights to gain veto power, sources said.

"They went for a come-from-behind home run but time ran out", said another source after the negotiations drew to a close.

Western Digital has tried to block the sale in court, but so far the company has been unsuccessful in halting the sale completely.

Toshiba has agreed to sell its memory-chip business to KK Pangea, a special objective acquisition company formed by a Bain Capital Private Equity-led consortium.

It said the deal, if approved, would ensure it remained public.

Regarding its partnership with SanDisk, which in 2016 was acquired by Western Digital, Toshiba said "any future collaboration between SanDisk and TMC will be discussed by the two parties".

The auction has gone through dizzying twists and turns.

Following the signing of a memorandum of understanding on 13 September, Toshiba has apparently concluded a deal to sell its semiconductor business to Bain Capital for $18billion.

In Japan, it was also anxious that the Korean chipmaker's participation in the acquisition would allow tech leaks, weakening Japan's competitiveness in semiconductors. Yet, it is still not clear how much Apple will contribute to the agreement.

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