The U.S. private equity fund KKR will be partnering with a Japanese public-private fund – Innovation Network Corp. of Japan (INCJ) – to bid jointly for Toshiba’s memory unit, Japan’s economic newspaper Nikkei reported Friday.
The newly surfaced bid can be interpreted as a last-ditch effort by Japan to save, and potentially hang onto, Toshiba’s flash memory business -- the pride of the nation’s engineering community.
The KKR-INCJ team is expected to participate in a second bidding round in May after performing due diligence on Toshiba Memory. Nikkei reported that “Toshiba’s partner Western Digital and the state-backed Development Bank of Japan may join in as well.” The amount of the bid remains to be worked out, the newspaper said.
Toshiba plans to choose a winner before its general shareholders meeting in late June.
Nicky Lu, Chairman, CEO & Founder, Etron Technology, Inc., said in an interview with EE Times here Friday, “The Japanese government must save Toshiba’s NAND business. It is Japan’s crown jewel.” Although he has no direct knowledge of business current negotiations surrounding Toshiba in Japan, Lu, a technologist, is a keen observer of semiconductor technology and industry. He remarked, “It is Toshiba who invented NAND flash. I can’t believe the Japanese government would let it go.”
Lu, who served as Chairman of the Taiwan Semiconductor Industry Association until earlier this year, is currently Executive Board Director of the organization.
Media speculation about potential bidders ranges from Western Digital and Broadcom to SK Hynix and Hon Hai. The KKR-INCJ bid is likely the one Japanese government officials have been waiting for.
Nikkei noted that acquisition by the KKR-INCJ team would let Western Digital’s joint venture with Toshiba continue. The newspaper further speculated that “Western Digital is sounding out KKR about a partnership and could join the consortium if the terms are right.”
Japanese government officials and industry observers appear to be rationalizing the newly surfaced US-Japan bid for Toshiba as a way to avoid potentially lengthy antitrust reviews, if Western Digital bought Toshiba Memory outright. It would also reduce the risk of “running afoul of laws restricting investments in Japanese companies that relate to national security.”