September 13, 2017 1:15 pm JST

Toshiba signs memorandum with Bain to negotiate memory unit sale

Conglomerate to prioritize talks with consortium including SK Hynix

TOKYO -- Toshiba has decided to sign a memorandum of understanding with U.S. investment fund Bain Capital to begin concrete negotiations over the sale of its memory unit, as the embattled Japanese conglomerate struggles to survive.

The decision was reached at a Toshiba board meeting on Wednesday, and the company has already informed its main banks about the decision. Bain leads a tri-national consortium including South Korean chipmaker SK Hynix, The Innovation Network Corp. of Japan and the Development Bank of Japan.

Toshiba ended the previous financial year in negative net worth, and needs the funds from the sale of its flash memory unit to remain on the Tokyo Stock Exchange. The company had been in negotiations with partner Western Digital over the sale, but significant differences between the two led Toshiba to once again prioritize negotiations with the Bain-led consortium. The Japanese company is looking to finalize the deal at a board meeting next week.

The memorandum is not legally binding, however, and Toshiba will continue negotiating with other bidders including the group led by Western Digital.

"We are disappointed that Toshiba would take this action, despite Western Digital's tireless efforts to reach a resolution that is in the best interests of all stakeholders," Western Digital said in a statement.

"It is surprising that Toshiba would continue to pursue a transaction with a consortium led by Korea-based SK Hynix Inc. and Bain Capital Japan without (Western Digital's subsidiary) SanDisk's consent," it added. "We remain confident in our ability to protect our JV interests and consent rights."

Toshiba shares ended the day unchanged at 331 yen.

(Nikkei)

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