Sources who are familiar with the matter say that companies including US chipmaker Broadcom, and private equity firms KKR & Co LP, and Bain Capital are seeking to make a bid for Toshiba Corp’s semiconductor business. There is currently a deadline in place of tomorrow for the second round of bids. It has been reported that to be able to make the offer, Broadcom has teamed up with a private equity firm called Silver Lake, while Bain has chosen a partnership with the South Korean chipmaker SK Hynix. It is not yet clear whether either company is in a position to make their offer at some time tomorrow before the deadline ends.
ToshibaCorp was forced to put up this part of the business when they were beset by financial problems due to spiraling costs at its nuclear unit, which is now bankrupt. Toshiba Corp say that they value this part of the company at around 2 trillion yen, or approximately $18 billion, but are facing problems with selling due to one of their business partners, Western Digital Corp, have stated that they will seek to block any sale which does not have the company’s full consent. Western Digital Corp jointly runs Toshiba’s main semiconductor plant and is one of the potential buyers for the semiconductor unit. The government has also stated that they will block any sale which they believe will lead to the valuable technology being taken out of the country and that it would be highly preferable if a company with state backing was to buy the company.
It’s being reported that KKR is the most likely to win the bidding war as they have the backing of Innovation Network Corp of Japan (INCJ), and may make an offer of at least 1.8 trillion yen. The sources, who refused to be named as the ongoing talks are confidential said that Bain plans to bid around 1.5 trillion yen for a majority stake, which would allow Toshiba and the current management of the business to retain a sizeable holding in the chips unit. Although SK Hynix is part of the process, they are not likely to end up buying the company as there are anti-trust concerns. Sources also say that there is potential for the bid to be raised to make it more competitive. When approached, all the companies involved declined to comment.
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