Toshiba misses deadline for chip unit sale again, says still in talks

31 Aug 2017

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With three groups vying for Toshiba Corp's memory chip unit with offers varying from $17 billion to $20 billion, the Japanese technology giant today said it is yet to finalise a deal for sale of the unit, missing yet another deadline set by the company itself and increasing the prospect of future vulnerabilities.

Reports said iPhone maker Apple too has jumped into the race with a consortium offering to pay about $20 billion for the unit.

Others in the race include a consortium led by Toshiba's US partner Western Digital and some buy-out firms and another that includes Taiwan-based contract manufacturer of electronic gadgets Foxconn.

Toshiba's failure to seal a deal to sell its prized chip business raises doubts about whether the company will be able to plug a balance sheet hole in time to avoid a delisting and keep the chips unit competitive.

The board of the embattled Japanese conglomerate met earlier in the day to review a $17 billion offer by a consortium led by Western Digital as well as bids from groups led by Bain Capital and by Taiwan's Foxconn.

Toshiba said in a statement it was continuing to talk with all three suitors and had not made any decision to reduce the pool of candidates.

"Toshiba intends to continue negotiations with possible bidders to reach a definitive agreement which meets Toshiba's objectives at the earliest possible date," it said.

Reports quoting sources familiar the matter said the sale process is dragging mainly because of differences between Toshiba and Western Digital over the deal process. They say the two were struggling to come to an agreement over the US company's future stake in the business.

Meanwhile, Bain Capital resubmitted an offer, worth some $18 billion, late on Wednesday, at the last minute, bringing in Apple Inc to help bolster its bid, sources said.

Foxconn, the world's largest contract electronics maker, formally known as Hon Hai Precision Industry, has also put in an offer.

Toshiba has been forced to sell its prized memory chip unit following heavy losses at its US nuclear business unit Westinghouse that landed the company in a financial mess, involving billions of dollars in liabilities.

Sources expect Toshiba to still sign a deal with the Western Digital group amidst legal challenges and the prospect of losing market to rivals, including Korean technology giant Samsung.

Failure to come to a deal soon could also mean that Toshiba might not be able to obtain necessary regulatory approvals by the end of the financial year in March.

Also, a failure to raise cash through the proposed sale would force it to report negative net worth for the second year running and face a potential delisting.

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