Toshiba has selected a consortium as their preferred bidder in the sale of Toshiba's memory business. The consortium is led by the Innovation Network Corporation of Japan, an investment partnership between the Japanese government and 26 Japanese corporations. Toshiba hopes to have an agreement in place in time for their June 28 annual shareholder meeting and to close the deal by March 2018.

Besides the Innovation Network Corp. of Japan (INCJ), the consortium also includes the Development Bank of Japan as well as Bain Capital Private Equity. INCJ is a public-private investment company owned by the government and 19 private corporations; it was established in 2009 with the purpose of revitalizing industry in the country. The company played a key role in establishment of Japan Display Inc. (JDI), which absorbed LCD divisions of Sony, Toshiba and Hitachi. Development Bank of Japan is an investment and financial services organization that is expected to be privatized eventually, but is currently used to fund everything from reinforcing competitiveness of enterprises to disaster relief. For Bain Capital Private Equity a partial acquisition of Toshiba's memory business would be the first investment in semiconductors as previously the company focused primarily on software and services (e.g., Symantec, Myob, etc.). From reports, it appears that Bain itself is being further backed by none other than Toshiba's rival in the memory business, SK Hynix.

Investments Planned to be Made by Members of the Consortium
Name Investment in ¥ Investment in $
Bain Capital Private Equity ~¥425 billion ~$3.806 billion
SK Hynix (will invest with Bain Capital) ~¥425 billion ~$3.806 billion
INCJ ~¥300 billion ~$2.687 billion
Mitsubishi UFJ Financial Group (will invest with INCJ) ~¥550 billion ~$4.927 billion
Development Bank of Japan ~¥300 billion ~$2.687 billion
TOTAL ¥2 trillion ~$17.9 billion
Source: Reuters

Toshiba said that the consortium presented the best proposal “not only in terms of valuation, but also in respect to certainty of closing, retention of employees and maintenance of sensitive technology within Japan.”

Meanwhile, Western Digital continues to object to Toshiba's efforts to spin off and sell their portion of the Toshiba–SanDisk joint venture. Western Digital has not been able to keep pace in the bidding war for Toshiba's memory business, and they are seeking to intervene in any attempt by Toshiba to conduct a sale without consent from Western Digital's SanDisk subsidiary. In May, Western Digital initiated arbitration proceedings against Toshiba, and last week Western Digital filed for a preliminary injunction to prevent Toshiba from selling the memory business until the arbitration is resolved. A hearing on the injunction request is scheduled for July 14.

A profitable sale of the memory business is crucial to Toshiba's financial health as other portions of the conglomerate are deeply troubled. Toshiba's Westinghouse nuclear power subsidiary filed for Chapter 11 bankruptcy earlier this year after an annual loss of around $9 billion. Those losses and continued effects from previous accounting scandals forced Toshiba to put their thriving flash memory manufacturing business on the market as the only way to raise enough money in a short timeframe. The winning bid for Toshiba's memory business is expected to be at least $18 billion. No matter who ends up buying the Toshiba memory business, the landscape of the flash memory market will be very different. Toshiba is currently the second-largest manufacturer of NAND flash memory, behind Samsung, with the sale coming at a time when all memory prices are spiking due to high demand.

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  • Samus - Wednesday, June 21, 2017 - link

    It's intriguing that Toshiba wasn't part of INCJ all along, considering Mitsubishi and even Hynix, a KOREAN company, were indirectly vested in INCJ. Reply
  • Bullwinkle J Moose - Wednesday, June 21, 2017 - link

    It would be great if WD gets a big win for Toshiba's Memory Biz

    We could all benefit if WD imposed better quality control over the implementation of Toshiba Flash in 3rd party use cases like thumb drives

    Toshiba sure wouldn't do it

    We need better "consistency" in the performance of this Flash across ALL similar products

    Western Digital has a great history in this regard
    Reply
  • Bullwinkle J Moose - Wednesday, June 21, 2017 - link

    "We could all benefit if WD imposed better quality control over the implementation of Toshiba Flash in 3rd party use cases like thumb drives"
    ------------------------------------------------------------

    What I meant was, this is not a problem with the flash itself but with controller implementations that give the flash a bad name when it wasn't the fault of the flash

    I am seeing a lot of problems with thumb drives that use Toshiba Flash but do not perform consistently from one drive to the next

    WD might actually try requiring 3rd parties to meat the performance envelope that they know for a fact the flash can achieve

    I sure hope so anyway
    Reply
  • Hurr Durr - Wednesday, June 21, 2017 - link

    >yaps about consistency
    >can`t keep posts in a thread

    Oh the ironing.
    Reply
  • warreo - Wednesday, June 21, 2017 - link

    the ironing indeed... Reply
  • Stochastic - Wednesday, June 21, 2017 - link

    Muphry's law strikes again. Reply
  • vladx - Thursday, June 22, 2017 - link

    Muphry's law nice, didn't know about this one until now. Reply
  • FreckledTrout - Thursday, June 22, 2017 - link

    The most incompetent troll award goes to, the owner of the Hurr Durr account, for his role in the ironing. Reply
  • Hurr Durr - Friday, June 23, 2017 - link

    Joke flew over your head, and still you managed to get butthurt. The ironing just got ten feet higher! Reply
  • Stochastic - Wednesday, June 21, 2017 - link

    "No matter who ends up buying the Toshiba memory business, the landscape of the flash memory market will be very different. Toshiba is currently the second-largest manufacturer of NAND flash memory, behind Samsung, with the sale coming at a time when all memory prices are spiking due to high demand."

    What are the repercussions of the sale expected to be for consumers? Is this going to raise or lower NAND pricing?
    Reply

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