Toshiba Corp. announced Wednesday (June 21) that is board of directors selected a consortium made up of the Innovation Network Corporation of Japan (INCJ), Bain Capital and the Development Bank of Japan as its preferred bidder for its memory chip spinoff, Toshiba Memory Corp.
South Korean memory chip vendor SK Hynix said it is also part of the consortium. Hynix will provide about $2.62 billion, or around 15 percent of the total buyout price, according to a report by the Korea Herald.
Toshiba didn’t say how much the consortium’s bid was worth. Media outlets have reported that the consortium’s bid was in excess of the $18 billion minimum that Toshiba had set.
Toshiba said the board determined that the consortium presented the best acquisition proposal based on valuation, certainty of closing and retention of employees. Toshiba also said the consortium’s bid would retain sensitive technology within Japan.
The consortium’s bid was selected over several others, including one submitted by Broadcom Corp. and partner Silver Lake Partners and one submitted by contract manufacturer Foxconn in conjunction with Apple Inc. and Dell Inc.
Western Digital, Toshiba’s partner in NAND technology development and manufacturing, pushed hard to acquire the unit and has filed suit against Toshiba asking a California court to force Toshiba to halt the sale.
Toshiba said it hopes to have a definitive agreement in place with the consortium by its annual shareholder meeting on June 28. The company hopes to close the transaction by the end of its fiscal year in March 2018.
The consortium was thought to have the upper hand in bidding based on the Japanese government’s preference that the technology be transferred to a Japanese entity.
According to DRAMeXchange, a research firm that tracks memory chip pricing and trends, SK Hynix would not have direct influence over the operation of Toshiba Memory, but would gain greater access to the financial information and business plans of the company. SK Hynix could also collaborate with Toshiba’s memory business in areas such as technology at a later time, DRAMeXchange said.
With new owenership, the spin off will have the resouces to boost R&D and production planning, DRAMeXchange said. The new could eventually reshape the competitive landscape of the NAND flash market and become a major rival to Samsung, the leading supplier of NAND.
In the short term, the deal could cause the NAND flash market to begin shifting from undersupply to equilibrium in the fourth quarter of this year, DRAMeXchange said. In the long run, the support and demand provided by the consortium could help the spun-off memory business to become more competitive against Samsung in terms of NAND flash production capacity and related technology.
Toshiba’s memory business had sales of about $1.97 billion in the first quarter. The company had NAND market share of about 16.5 percent in the first quarter, trailing only Samsung and Western Digital, the firm said.
Together, Toshiba and Western Digital currently account for about 34.7 percent of global NAND flash capacity, trailing only Samsung's share of capacity, 36.6 percent, DRAMeXchange said.