Toshiba picks US-led consortium for chip business sale


The Japanese manufacturer has been troubled by big losses at Westinghouse Electric, its United States nuclear unit, which filed for bankruptcy in March.

Embattled Toshiba Corp needs the sale of its lucrative NAND flash-memory SanDisk joint venture to survive.

Earlier in the day, USA private-equity firm Bain Capital Private Equity LP signed a memorandum of understanding with Toshiba, intending to reach a deal to buy the memory-chip business by a Bain-led consortium. But Western Digital protested within hours of the announcement. Toshiba is also disappointed by Western Digital's misleading statements regarding the outcome of ongoing litigation between the two companies concerning SanDisk's purported consent rights: the parties have merely agreed, before a single court, to provide notice when an agreement for the sale of TMC is signed-and prior to a related closing-for a limited period of time, until arbitration between the companies is underway.

But on Wednesday, Toshiba revealed that it had entered into a memorandum of understanding with Bain Capital, after Bain came forward with new proposals in order to break the impasse. While some Toshiba officials expect that Western Digital will have to drop its lawsuit at some point, others say Toshiba must reach an amicable settlement with Western Digital because the latter's technology is needed to design the chips.

Western Digital, which bought SanDisk past year, has argued the sale might violate terms of the joint venture with Toshiba.

Applied Materials, Inc. (NASDAQ:AMAT) upgraded to "Buy"; Goldman Sachs
Currently, 425.23 million total shares are owned by the public and among those 396.36 million shares have been available to trade. As analysts monitor volatile markets in recent weeks they have updated their price targets on shares of Applied Materials, Inc.

Apple has opposed Western Digital's bid and made a decision to back Bain because of the business's strategic importance, the people said.

Toshiba had selected the Bain-led group as its preferred business in June, but talks reportedly collapsed after INCJ and the Development Bank of Japan - both of which are backed by the Japanese government - balked when Western Digital initiated legal action.

Toshiba's massive red ink began with the reactors it has been building in the U.S., which are still unfinished, partly because of beefed up safety regulations following the 2011 Fukushima nuclear disaster.

Toshiba's financial woes are largely connected to its failed nuclear unit Westinghouse.

An outside investigation found profits had been inflated and expenses hidden across the board.