Western Digital group to
offer $17.4 billion for Toshiba chip unit: sources
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[August 24, 2017]
By Taro Fuse
TOKYO (Reuters) - A consortium that
includes Western Digital is offering 1.9 trillion yen ($17.4 billion)
for Toshiba Corp's memory chip business, which the Japanese conglomerate
is trying to sell to cover losses from its U.S. nuclear business,
sources said on Thursday.
Western Digital is set to offer 150 billion yen through convertible
bonds and will not seek voting rights in the business, the sources who
were familiar with the deal said.
The consortium also includes U.S. private equity firm KKR & Co <KKR.N>
as well as the state-backed Innovation Network Corp of Japan and
Development Bank of Japan, all of which will offer 300 billion yen each
for the chip business, the sources said.
Under the proposal, Toshiba's lenders including Sumitomo Mitsui Banking
Corp and Mizuho Bank would also extend around 700 billion yen in loans,
Other Japanese companies will also invest around 50 billion yen to
ensure domestic firms hold a combined 60 percent stake, the sources
said, adding that Toshiba itself would keep a 100 billion yen stake in
Toshiba said it could not comment on discussions with potential suitors
for the chips business. Western Digital said it could not comment
immediately, while KKR declined to comment. The sources requested
anonymity because the talks were confidential.
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A logo of Toshiba Corp is seen on a printed circuit board in this
photo illustration taken in Tokyo July 31, 2012. REUTERS/Yuriko
Reuters has reported earlier that the group was offering around 2 trillion yen
but it was unclear how much each party in the group was prepared to offer and
whether Western Digital would insist on obtaining voting rights.
Sources have said that Toshiba wants to reach a deal by the end of the month and
close the sale by the end of the fiscal year in March to ensure it does not
report negative net worth, or liabilities exceeding assets, for a second year
running. This could result in a delisting from the Tokyo Stock Exchange.
Given regulatory approvals could take more than six months, the company has been
hoping to reach a deal by the end of the month to ensure it can close the sale
(Reporting by Taro Fuse; Additional reporting by Makiko Yamazaki, Kentaro Hamada
and Yoshiyasu Shida; Writing by Ritsuko Ando; Editing by Muralikumar
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