Western Digital Said to Sweeten Offer For Toshiba's Memory Unit
While Western Digital is trying to block Toshiba from selling its memory unit to a third party, it is considering a sweeter offer, according to reports.
Two seperate reports from Rueters and the Nikkei say that Western Digital plans to raise its offer for Toshiba s prized semiconductor unit to $18 billion or more. The U.S. chipmaker is part of a consortium led by a Japanese government-backed fund.
Toshiba has been favoring a rival bid from Broadcom, which has partnered with U.S. private equity firm Silver Lake to offer 2.2 trillion yen.
A spokesman for Western Digital had no comment.
Toshiba had set a 2 trillion yen threshold for the sale as it rushes to find a buyer to cover billions of dollars in cost overruns at its now-bankrupt U.S. nuclear business Westinghouse Electric.
Meanwhile, Western Digital is pursuing an international arbitration claim that Toshiba has breached joint-venture contracts by entertaining outside bids. Western Digital argues that the sale cannot proceed without its consent but the U.S. firm is expected to drop its claim if Toshiba agrees to the new offer.
Toshiba is concerned an acquisition by Western Digital would run into antitrust objections from China and elsewhere as the U.S. firm is the world's third-largest NAND producer behind South Korea's Samsung Electronics and Toshiba.
To counter those concerns, the Western Digital portion of the consortium's new offer will be in the form of a debt purchase whereas the U.S. firm had previously been looking for an equity stake in Toshiba Memory,
Western Digital's new offer will also include a commitment to $25 billion dollars in capital spending for the joint venture's Yokkaichi facility, including building two fabrication plants, Reuters reports. It will also pledge $39 billion for research and development and money to boost the local economy, while expanding the workforce there by five percent a year for two years.
Western Digital will likely have to obtain consent from its board and stakeholders before it could go ahead with the potential proposal.