Bain may join Japan-US alliance for Toshiba Memory bid
The addition would increase the private-equity firepower of group that could also include KKR
TOKYO -- A proposal has emerged whereby Bain Capital would join fellow private equity firm Kohlberg Kravis Roberts in a nascent U.S.-Japanese consortium to acquire Toshiba's flash memory unit.
KKR and Bain submitted separate offers during the second round of bidding for Toshiba Memory last month. A consortium including both firms, along with the public-private Innovation Network Corp. of Japan and the state-backed Development Bank of Japan, would be well-positioned to challenge U.S. chip company Broadcom, now a front-runner.
The DBJ and INCJ had previously been seen as more likely to ally with KKR and Toshiba partner Western Digital. But the American hard-drive maker has insisted on a controlling stake in the Toshiba unit. It has filed for arbitration to block the sale on the grounds that any transfer of the operations without its consent violates joint venture agreements. This uncompromising stance spurred discussion of an alternative partnership excluding Western Digital but involving the two private equity firms.
Having both KKR and Bain on board could also provide the wherewithal for a Japan-U.S. team to meet Toshiba's 2 trillion yen ($18.2 billion) asking price. The Japanese conglomerate is counting on the sale of the spun-off memory unit to mend its finances after massive losses on U.S. nuclear operations.
The process is unlikely to be entirely smooth sailing. Bain still has an offer on the table and whether its goals would align with industry rival KKR's remains unclear. Western Digital could also get back in the running with a compromise offer to be submitted by Thursday.