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(Image courtesy of Toshiba).

Toshiba Approves Sale to Bain Capital, Taking Final Steps Before Deal

Toshiba announced on Wednesday that it had approved a plan to sell its memory chip business to a group led by American investment firm Bain Capital, potentially ending months of negotiation over the fate of the world’s second largest memory chip maker.

The purchase price would be around $17.8 billion, and Toshiba said in a statement that the buyers would include Bain Capital and two Japanese government funds, the Innovation Network Corporation of Japan and the Development Bank of Japan. Toshiba is aiming to sign an official deal within a few days and to close the transaction by March.

The tentative deal comes after months of complicated and confusing negotiations with multiple bidders, including Taiwan's Foxconn. The sale process was drawn out by competing proposals as well as legal challenges from Western Digital, which argues that it should be given preference in the sale because of its joint venture with Toshiba.

It is not clear whether Toshiba is still open to negotiating with other groups, particularly since it has been trying to distance itself from Western Digital, which said on Wednesday that it plans to move forward with arbitration. Toshiba, which invented the NAND flash memory at the heart of the dispute, is trying to cut Western Digital out of its latest factory in the Japanese city of Yokkaichi.

Western Digital said in a statement Wednesday that it is not backing down because of Toshiba’s announcement. “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,” the company said.

Western Digital has been fighting tooth and nail to control the sale process, and apparently, it was close to striking a deal with Toshiba last month. After it missed an internal deadline to complete the sale, Toshiba restarted negotiations with Bain Capital's group, which may also include SK Hynix and Apple.

The tentative deal is also financially complicated. Under the deal, Toshiba would sell shares of the memory unit to a holding company owned by Bain Capital. Then, Toshiba would invest around $3.1 billion to buy shares of the company, giving it some influence over the business and access to some profits. It is unclear how much control it would have.

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