Toshiba said to seek bids for chip unit at $13b value

Toshiba logo (visual from the MBT website -Shohei Miyano/Reuters)

Toshiba Corp. is sending letters soliciting offers for its memory chip business this week and seeking bids that value it at about 1.5 trillion yen ($13 billion), according to people familiar with the matter.

The Japanese conglomerate is offering a majority stake in the chip unit and would be willing to sell the entire business, said the people, asking not to be identified because the matter is private. A 1.5 trillion yen valuation for the whole operation would be below earlier reports the chip unit could fetch 2 trillion or 2.5 trillion yen.

Toshiba is reeling from losses in its U.S. nuclear division and selling assets to stabilize its balance sheet. President Satoshi Tsunakawa originally sought to sell a minority stake in the highly-prized memory chips business but has been forced to give up control because of the financial troubles. Whatever money it raises from the sale, Toshiba will likely be dropped from the first tier of the Tokyo Stock Exchange.

Potential bidders that have expressed interest in the the chip unit include Korea’s SK Hynix Inc., Taiwan’s Foxconn Technology Group., Western Digital Corp. and Micron Technology Inc., the people said. Among the financial bidders are Bain Capital, Silver Lake Partners and KKR & Co., they added.

Toshiba spokesman Motohiro Ajioka declined to comment about the memory chip deal. Western Digital didn’t immediately return calls and messages seeking comment. Micron, Foxconn and Silver Lake declined to comment. Hynix has said previously it is interested in Toshiba’s chips business.

Toshiba shares reversed early gains and fell as much as 2 percent in Tokyo trading. The stock had tumbled 26 percent this year before today.

Foreign buyers are under consideration in the chip sale, but will have to abide by requirements to maintain employment and keep production in Japan, one of the people said. Toshiba views financial buyers as more likely winners because they would probably be able to secure regulatory approval more easily, the person said.

Bidders that already produce flash memory chips would face anti-trust scrutiny, which may slow down completion and delay the cash Toshiba needs. Samsung Electronics Co.is the largest provider of memory chips, followed by Toshiba. Western Digital, Micron and Hynix are all smaller players in the market.

Toshiba may struggle to get the 1.5 trillion valuation for its chips business despite the broad interest, one of the people said. The company’s estimates for capital expenditures appear to be too low to sustain the business, the person said.

Last month, Toshiba sought preliminary bids for a minority stake in the business and the other chipmakers made offers that valued the operation at between $10 billion and $13 billion, the person said. There is little reason for that valuation to change now, the person said.

So far the Japanese government has not taken a public stance on the sale. Japan’s Chief Cabinet Secretary Yoshihide Suga last month said that flash memory chips — used in smartphones and solid-state disk drives — are an “extremely important” technology for the nation’s growth strategy.

Toshiba is aiming to complete the transaction by March 2018. Goldman Sachs Group Inc. is advising Toshiba on the sale.

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.