A management role in the business of Toshiba Corp’s memory chip unit is not being sought by Western Digital Corp (WDC.O), part of a group offering to buy the Japanese conglomerate’s chip unit, reported Reuters quoting several people familiar with the matter.
With the aim to cover losses from its bankrupt U.S. nuclear business Westinghouse, Toshiba is scrambling to sell its flash memory unit. with the U.S. firm offering 150 billion yen through convertible bonds, a consortium that includes Western Digital is offering around 1.9 trillion yen ($17.3 billion) for the unit, separate people reportedly told Reuters.
Even after it converts its bonds to shares, Western Digital will promise to limit its voting rights to no more than one-third and it will initially not seek voting rights, reported Reuters quoting people and sources on condition of anonymity as the talks were confidential.
A certain wariness among Toshiba’s chip business executives of a deal with the U.S. company have been recently described by some sources and Western Digital’s conciliatory offer comes amid such a situation.
Because they failed to agree on terms of a new joint venture contract after Western Digital bought SanDisk, Toshiba’s memory chip business partner for 17 years, ties between the two companies had soured quickly.
Arguing that it needs to consent to any sale, after the Japanese conglomerate initially picked a different group including South Korean chipmaker SK Hynix Inc as the preferred bidder, Western Digital has also taken Toshiba to court on the issue.
Western Digital declined to comment. Toshiba has said it could not comment on details of talks.
With the aim that is would be able to ensure it does not report negative net worth, or liabilities exceeding assets, for a second year running, Toshiba wants to close the sale by the end of the fiscal year in March, sources have said. The company could be delisted from the Tokyo Stock Exchange if its liabilities exceeding assets for a second year running.
The company has been hoping to reach a deal by the end of the month to ensure it can close the sale in time, given regulatory approvals could take more than six months.
Sources also said that if the two sides can agree on a deal, Toshiba’s board plans to vote on Western Digital’s offer on Aug. 31.
The U.S. private equity firm KKR & Co as well as the state-backed Innovation Network Corp of Japan and Development Bank of Japan are also included in the consortium with Western Digital. Sources also reportedly told Reuters that together, all of the members of the consortium will offer 300 billion yen each for the chip business.
(Adapted from Reuters)