New consortium reportedly has inside track with $17.3 billion bid.
SAN FRANCISCO — A new consortium involving Western Digital Corp. has emerged as the leading contender to acquire Toshiba Corp.’s semiconductor business and could pull the trigger on a deal by the end of this month, according to a report by Japan’s Nikkei news service.
A consortium involving Western Digital, U.S. private equity firm Kohlberg Kravis Roberts along with the government-backed entities the Innovation Network Corp. of Japan (INCJ) and the Development Bank of Japan has offered about 1.9 trillion yen (about $17.3) billion for Toshiba Memory and is in late-stage negotiations on a deal, according to the report.
According to the Nikkei report, plans call for Western Digital to ultimately take a stake of less than 20 percent in the unit after the deal clears regulatory reviews.Western Digital would not initially receive voting rights in the venture, the report states.
Relations have gotten testy between Toshiba and Western Digital — partners in NAND flash technology development and manufacturing — since Toshiba announced plans to sell off its semiconductor business earlier this year. The two sides have traded lawsuits in multiple venues over issues such as access to manufacturing data for Western Digital’s Sandisk subsidiary and are set to begin arbitration at the International Chamber of Commerce over Toshiba’s insistence that it doesn’t need Western Digital’s permission to sell its chip business.
Toshiba initially resisted Western Digital’s attempts to acquire Toshiba Memory, preferring instead a bid from another consortium that included INCJ, the Development Bank of Japan, Bain Capital and SK Hynix. But the two sides have been unable to finalize a deal, reportedly because of uncertainty over the outcome of Western Digital’s legal challenge to the sale.
According to the Nikkei report, the INCJ — a public-private venture — and the Development Bank of Japan are willing to be involved in whatever consortium strikes a final deal with Toshiba at the urging of the Japanese government.
Toshiba spun off its semiconductor business in April and began accepting bids for it in an attempt to raise funds to help offset massive losses at its U.S. nuclear power subsidiary. Toshiba is the No. 2 player in NAND flash, with market share of about 18 percent, trailing only Sansung Electronic Co. Ltd.
The $17.3 billion bid from the new consortium is lower than the estimated $18 billion Toshiba initially said it expected the chip unit to fetch.
—Dylan McGrath is the editor-in-chief of EE Times.
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