Toshiba negotiates the sale of TMC to a Bain Capital led consortium

Will Toshiba finally sell TMC?

Toshiba negotiates the same of TMC to a Bain Capital led consortium

Toshiba negotiates the sale of TMC to a Bain Capital led consortium

To say the least, Toshiba's planned sale of their Toshiba Memory Corporation (TMC) has not been going according to plan, with several delays preventing Toshiba from securing a deal earlier this year. 
Now it looks like Toshiba is finally closing in on a deal, a deal with the Bain Capital Private Equity who leads a consortium that includes SK Hynix and several other investment groups. This deal is reported to be worth around ¥2.4 trillion (about $22 billion USD), which includes ¥200 billion ($1.8 billion USD) that is earmarked for infrastructure improvements. 
Previously, Toshiba had chosen this Bain led group in June, with lawsuits with Western Digital (who has contested this sale), spoiling this earlier deal. 
Right now Toshiba is still in talks with three different investment groups which include the Innovation Network Corporation of Japan, Bain Capital and the Development Bank of Japan (Western Digital is part of this group). Right now it appears that Toshiba is working on a deal with the Bain-led consortium, with both groups entering into a non-binding MOU (memorandum of understanding).


Toshiba negotiates the same of TMC to a Bain Capital led consortium


Western Digital has since released a statement that shows their distaste for this new proposal, given SanDisk's joint ventures with Toshiba. SanDisk is owned by Western Digital, who fears that any deal between Toshiba and SK Hynix/Bain will allow research from their joint ventures to be given to SK Hynix (a competitor). 

Western Digital also wants to secure TMC for themselves, given the spike in demand for NAND in recent years in devices that range from smart devices and consumer PCs all the way to servers.  


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 wants to close this deal as soon as possible, given the company's dire financial situation, hopefully allowing the company to return to a positive net following the company's recent financial disasters.


You can join the discussion on Toshiba's potential sale to Bain Capital on the OC3D Forums.


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