Team Japan to join with Bain on Toshiba chip bid
State-backed fund creating wide partnership to seek memory unit
TOKYO -- The public-private Innovation Network Corp. of Japan is teaming up with Bain Capital of the U.S. on what could be a decisive bid for Toshiba's semiconductor memory unit, renewing hopes for an alliance that would keep the conglomerate's technology in Japanese hands.
The two investment funds, alongside the Development Bank of Japan, would offer more than 2 trillion yen ($18.3 billion) for Toshiba Memory, pitting the team against U.S. semiconductor heavyweight Broadcom, which has offered around 2.2 trillion yen. Bain previously made its own offer for the operations.
The INCJ, Development Bank of Japan, Bain and Toshiba itself would invest in a special-purpose company for the acquisition. Toshiba's main creditor banks and South Korean flash memory maker SK Hynix have pledged to finance such a deal. In addition, four or five Japanese companies could each contribute 10 billion yen or so to the bid.
The INCJ and DBJ had looked to form an alliance with American private-equity fund Kohlberg Kravis Roberts and Western Digital, a U.S. hard-drive maker that produces flash memory with Toshiba. But Western Digital has proven a difficult partner, initiating international arbitration to block the sale of the memory operations to any third party.
By bringing Bain on board, Team Japan aims to get stalled talks moving again. Western Digital has not yet pulled its bid for the memory unit, and could look to join the new Japan-U.S. alliance. KKR apparently has been asked to join the new team.
Toshiba's management will weigh various offers at a meeting Thursday, with the aim of settling on a buyer by the end of the month.