Toshiba’s pick for buyer of memory unit delayed

Toshiba’s choice of the winning bid for its valuable memory chip making unit, widely speculated to take place on Thursday, was postponed.

Western Digital, which jointly operates Toshiba’s main chip plant, has filed a court injunction to avert the sale and Bain Capital of the United States joined in at the last minute, along with a Japanese government-led consortium that includes SK Hynix as an auction suitor. Western Digital on Wednesday asked a court in California for an injunction to block the sale of Toshiba’s memory unit without its agreement - for fear that its rival would acquire the company.

Earlier in May, the U.S. company asked the International Court of Arbitration of the Paris-based International Chamber of Commerce to block the sale.

“Toshiba has no right to offer to transfer its joint venture interests to a third party and has no ability to enter into any transaction with a third party without obtaining our consent,” Western Digital said in the statement. “We are confident in our ability to protect our interests and rights.”

The California-based firm has been left out of a new Japan government-led group being formed to bid for the unit, Reuters said on Thursday, citing a person familiar with the matter. The report also said Western Digital expects to get a ruling on its injunction request by mid-July and that arbitration cases generally take 16-24 months to resolve.

Toshiba said in a statement Thursday that it was proceeding with picking a preferred bidder for its memory arm, the world’s second-largest producer of NAND chips after Samsung Electronics, by the second half of June and hoped to reach a definitive agreement on a sale by June 28, when Toshiba’s general shareholder meeting is scheduled. Some Japanese media report an extraordinary shareholder meeting could be held on June 21 to make a final decision.

Toshiba has demanded at least 2 trillion yen ($18 billion) for the unit, which it hopes to sell as soon as possible to prevent its shares from delisting from the Tokyo stock exchange due to the massive loss-making Westinghouse, a U.S. nuclear unit it invested.

Amid the ebb and flow of various bidders for the Japanese chipmaker in the past month, Innovation Network Corp. of Japan (INCJ), a state-backed Japanese investment fund, teamed up with Bain Capital of the United States, Nikkei reported on Thursday. The nascent consortium is set to compete against U.S. semiconductor heavyweight Broadcom, which has offered around 2.2 trillion yen - the highest bid yet - together with U.S. investment fund Silver Lake, for Toshiba Memory, valued at an estimated $18 billion or more.

SK Hynix and Development Bank of Japan have promised to help the Japan-U.S. consortium, which is known to have proposed more than 2 trillion yen, to finance the deal. SK Hynix, the chip-making arm of SK Group, is reportedly contributing 300 billion yen to gain about a 15 percent stake in the unit. SK Hynix, the world’s fifth-largest NAND flash memory producer, initially sought to become a single bidder but diverted its plan as it became concerned its acquisition of Toshiba Memory would raise anti-monopoly issues.

SK Hynix declined to comment or provide information about the deal due to a confidentiality agreement. Shares of SK Hynix closed 2.19 percent higher at a record high of 60,600 won on Thursday.

Another U.S. private-equity fund, Kohlberg Kravis Roberts (KKR), has been asked to join the new consortium, which Nikkei has dubbed “Team Japan,” to put the company under domestic control.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]