New Toshiba memory bid excludes SK Hynix

The sale of Toshiba’s memory chip business has taken an unexpected turn as the Japanese semiconductor giant has launched negotiations with a new consortium that includes Western Digital, an American hard disk manufacturer, according to the Nikkei business daily Wednesday.

The report said a consortium including Western Digital, Kohlberg Kravis Roberts of the United States, the public-private Innovation Network Corp. of Japan and the state-backed Development Bank of Japan tendered a roughly 1.9 trillion yen ($17.3 billion) bid for Toshiba Memory.

Representatives from Western Digital are now in talks with counterparts from Toshiba and other related parties, according to the Japanese media.

Toshiba in June picked a Japanese-American-Korean consortium that consisted of the Development Bank of Japan, Innovation Network Corp. of Japan, Bain Capital and SK Hynix as the preferred bidder for the computer memory unit with an offer of 2 trillion yen. Development Bank of Japan and Innovation Network Corp. of Japan jumped into the new consortium but Bain Capital and SK Hynix have been left out, according to Nikkei.

“We are still in negotiations with Toshiba, as part of the original consortium,” said an SK Hynix spokesman, refusing to confirm whether SK Hynix could join the new negotiating table. He added the situation regarding the sale will become clearer after Toshiba’s board meeting scheduled next Monday.

Last month, Innovation Network Corp. of Japan threatened SK Hynix in an attempt to make it give up its bid for a voting stake in the Japanese company. The voting stake had not initially been part of the deal, and it raised concerns about technology leaking to the Korean rival and potential antitrust hurdles that would likely require a review - stalling the sale.

Further progress of the deal in June was stymied after Western Digital, the American hard-drive producer and Toshiba’s joint chip production partner, opposed the sale of Toshiba Memory to a third party without its consent by filing a request for arbitration to block the sale. Western Digital, which runs chip fabrication facilities in Japan with Toshiba, cited breach of joint-venture agreements. But the company told Toshiba earlier this month that it could ditch the arbitration request if a deal is reached.

Toshiba is in a rush to sell the flash memory arm to cover losses from its bankrupt U.S. nuclear unit Westinghouse and wants to complete the sale by March, the end of the fiscal year. It is in dire need of cash to avoid being delisted from the Tokyo Stock Exchange.

Nikkei said the Western Digital camp is expected to complete due diligence on the memory unit as early as next week. Toshiba aims to sign a final deal after obtaining a green light from the board next Monday.

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