Toshiba Decides to Sell Toshiba Memory to a Group That Includes SK Hynix at the Moment

Sep 21, 2017

Toshiba approved to sell its NAND flash memory subsidiary called Toshiba Memory to a group of American, Japanese, South Korean buyers that include SK Hynix and Bain Capital. However because this approval also does not have legal binding force like before, there is always a chance that a decision can be overturned anytime until an actual contract is signed off.
According to foreign press such as Reuters and Kyodo News, Toshiba selected a group of American, Japanese, South Korean buyers as the candidate that will take over Toshiba Memory at a board of directors meeting that was held in the morning of the 20th. This group includes SK Hynix from South Korea, Bain Capital from the U.S., and INCJ (Innovation Network Corporation of Japan), which is a Japanese public and private fund, and political investment banks from Japan. It is heard that Apple and Dell also joined this group recently.
There is a chance that Toshiba’s decision may change again in the future. It is heard that Toshiba actually negotiated with WD (Western Digital), which is another potential buyer, until the morning of the 20th. “Because Toshiba has to bear variety of lawsuits if WD is eliminated as a potential buyer, it is negotiating with WD in order to induce better terms from WD.”
Previously, Toshiba showed uncertainty in its decision back in June when it selected the group of buyers that include SK Hynix as the preferred bidder and suddenly started negotiating with WD about selling Toshiba Memory. At a board of directors meeting that was held last week, Toshiba announced that it will negotiate second time with groups that individually include SK Hynix, WD, and Hon Hai. Meanwhile Toshiba has been increasing the sales price of Toshiba Memory.
Of course Toshiba cannot blindly continue this tug-of-war with these groups as it needs to finish selling Toshiba Memory by next March and resolve all exceeding debts. If not then it will be delisted while creditors have to stack up enormous amount of allowance for bad debts. Toshiba needs to repay $6.10 billion (7 trillion KRW) of debts by end of September. Creditors are saying that they will extend the deadline for debts when a final contract is achieved. Therefore it seems that final decision will be made by end of this month.
“This deal will be completed at last when there are signatures on a contract with legal binding power.” said a representative in this industry. “Since this is a so-called ‘red line’ when this deal needs to be done by end of this month, it is still early to conclude on Toshiba’s decision.”
Even when the group that includes SK Hynix purchases Toshiba Memory, actual profit for SK Hynix will not be much at the moment. Not only is it participating in this bidding by borrowing loans but it is heard that it will not be able to secure more than 15% of shares in the future. Also number of participating businesses such as Apple and Dell increased while many negotiations were taking place. This indicates that SK Hynix now has businesses that it needs to keep in check in the future.
On the other hand, some are saying that Samsung Electronics’ position as the world’s number one memory business will be weakened once multinational Smartphone and PC server manufacturers such as Apple and Dell are combining their businesses with Toshiba Memory.
Staff Reporter Han, Juyeop | powerusr@etnews.com

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