News Worms
News Worms


Toshiba Seeks Buyer in Hynix

Toshiba Seeks Buyer in Hynix

The syndicate, which includes the state-backed Innovation Network Corp. of Japan, the Development Bank of Japan, South Korean chipmaker SK Hynix Inc. and four USA tech firms, will pay around 2.4 trillion yen (21.52 billion US dollars) for Toshiba Memory Corp.

Toshiba board members are to meet Wednesday, but it was unclear whether they could reach any decision, after saying last Wednesday the company was accelerating talks with the Hynix group.

Toshiba needs to sell the division to help coverthe costs of its.S. nuclear business. Without the sale, the company may have been dropped from the stock markets. This move keeps a key business out of the hands of foreign tech rivals. On Jan. 27, Toshiba revealed that its flash memory business would be spun off into another business entity so that it would have "more operational flexibility and stronger fundraising ability".

But the two companies apparently failed to reach an agreement, as they remained apart over the USA firm's future involvement in Toshiba Memory's management if it wins the bidding race. According to Reuters, Toshiba has selected a consortium led by Bain Capital to buy its valuable chip unit.

Analysts say the sale of the chip unit should remove that threat, though the actual completion of the deal is expected to be delayed by both antitrust scrutiny and a raft of legal action launched by Toshiba's joint venture partner in the chipmaking business, United States group Western Digital. One consortium included Bain Capital, the Innovation Network Corporation of Japan and the Development Bank of Japan.

In a statement, Toshiba said the sale of Toshiba Memory would boost its finances by 740bn yen (£5bn) after taxes.

Toshiba is the world's number two chipmaker and its Toshiba Memory unit accounts for about a quarter of its revenue. However, up to 50 percent of the company's operating margin for the period also came from the same source. Private equity groups are frequently interested in recouping their investment quickly, and that could mean decisions that are more about short-term profit than your best interests.

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