Bain, KKR, Broadcom among suitors lining up for Toshiba's chips business

Fri May 19, 2017 12:09pm EDT
 
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TOKYO (Reuters) - Suitors including private equity firms KKR & Co LP, Bain Capital and U.S. chip maker Broadcom Ltd are lining up for Toshiba Corp's semiconductor business, sources familiar with matter said ahead of a deadline for second-round offers on Friday.

Broadcom, which has teamed up with private equity firm Silver Lake, and Bain which has partnered with South Korean chipmaker SK Hynix will participate in the second-round, the people said. It was not clear if KKR and its partners would submit their offer by the end of the day.

Toshiba, which values its chip unit at at least 2 trillion yen ($18 billion), was forced to put its prized asset on the block this year, after dramatic cost overruns at its now-bankrupt U.S. nuclear unit left it scrambling for cash. Selling the unit is critical for the company's recovery.

However much of the sale and its outcome are still uncertain, as Toshiba's business partner, Western Digital Corp, which jointly runs Toshiba's main semiconductor plant and is one of the suitors for the unit, is seeking to block any sale that does not have its consent.

KKR is expected one of the most favored bidders. It is set to join hands with a state-backed fund, the Innovation Network Corp of Japan (INCJ), in an offer of at least 1.8 trillion yen, one person said, adding that the bid could be raised to make it more competitive.

The government has made clear that it is prepared to block any sale that could see highly valued chip technology leave the country and the participation of government-backed investors is seen as a key stamp of approval.

Sources familiar with the matter said that INCJ and the Development Bank of Japan had separately told Toshiba of their intention to take part in the bidding process although there were no details on what form that participation may take.

KKR and INCJ declined to comment. Toshiba also declined to comment.

Bain plans to bid around 1.5 trillion yen for a majority stake, two of the sources said, declining to be identified as talks were confidential.   Continued...

 
FILE PHOTO: The logo of Toshiba is seen as a shareholder arrives at Toshiba's extraordinary shareholders meeting in Chiba, Japan  March 30, 2017.   REUTERS/Toru Hanai/File Photo