Apple Could be Behind Toshiba's MoU With Bain Capital's Consortium
Apple seems to play the role of kingmaker in the battle for Toshiba's memory chips business, as the iPhone maker is said to be in talks to provide about $3 billion in capital for Bain Capital's bid for the unit.
According to Bloomberg's sources, Apple is interested in injecting about $3 billion in capital for Bain Capital's bid for the unit, adding to financial support from Dell, Seagate Technology Plc and SK Hynix Inc. That support convinced Toshiba to sign a memorandum of understanding with Bain and work toward a final agreement this month, the repoprt added.
If the report is true, the Cupertino, California-based company is helping swing the deal away from Western Digital Corp., which tried to buy the chips unit with KKR & Co.
Toshiba has been in negotiations for months to sell off its chips business and pay for a disastrous move into the U.S. nuclear business. The company needs to raise the money by March to avoid seeing its shares delisted from the Tokyo Stock Exchange. The auction has been complicated by legal action from Western Digital, which has argued it should have veto rights in any sale because of its partnership with Toshiba in the chips business. The Japanese company disputes that and sued Western Digital for more than $1 billion for interfering in the auction.
Apple depends on flash memory from Toshiba in its iPhones and iPods, and wants a continued supply so it's not dependent on rival Samsung.
Toshiba said Thursday it "regrets" that Western Digital is persistently overstating its rights and that the Japanese company is committed to completing the chip sale by March.
Meanwhile, the legal dispute is progressing toward a resolution, with a three-member arbitration panel likely to be assembled by the end of the month. Arbitration is expected to take no more than 6 or 7 months.
Toshiba selected a Bain-backed group as its preferred bidder in the chip sale in June. The effort was hampered by opposition from Western Digital, which solicited support from Japanese government officials and banks.
On Wednesday, Toshiba announced that it has finally signed a memorandum of understanding (MOU) with Bain Capital Private Equity LP, memorializing the parties' intent to negotiate a definitive agreement for the sale of TMC by the end of this month.
Bain has come forward with a new proposal, Toshiba said. According to the latest proposal by the Bain-led consortium, the INCJ and DBJ will not provide funds following the acquisition of Toshiba Memory until the lawsuit is settled. Instead, Apple and Dell will help fund the deal.