Toshiba Sale Of Chip Unit Faces Hurdles -- WSJ
By Takashi Mochizuki and Kosaku Narioka
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 29, 2017).
TOKYO -- A nearly $18 billion deal for Toshiba Corp.'s memory-chip unit could strengthen the No. 2 player in a fast-growing industry -- if the deal survives regulatory and legal hurdles.
Eight months after Toshiba said it wanted to sell part of the unit, it finally signed a contract with a buyer Thursday. The buyer group is led by Bain Capital LLC and will get financing from Apple Inc., South Korean chip maker SK Hynix Inc. and other major technology companies.
If the deal closes by next March 31, Toshiba's target date, it is set to bring the troubled industrial conglomerate's balance sheet back into the black.
Several of the companies involved in the buyer group are big customers for the unit's NAND flash-memory chips and are hoping to bolster Toshiba, a distant No. 2 to industry leader Samsung Electronics Co. The chips are used in a broad range of electronics from smartphones to computer servers.
Seagate Technology PLC, a maker of computer storage products that joined the Bain-led consortium, said need for the chips was growing.
"We must be able to support these demands," said Chief Executive Steve Luczo.
The deal, if completed, will also create a loose alliance between Toshiba and SK Hynix, which is No. 5 in NAND flash memory, according to IHS Markit. The South Korean company is providing about $3.5 billion in financing for the Bain alliance and is taking bonds convertible into a stake of as much as 15% in the Toshiba chip unit.