Toshiba ends tug of war between bidding groups for memory chip unit

Toshiba selects Bain group as buyer of its memory chip business

Toshiba said to have selected Bain-SK Hynix group to buy its memory business

According to news reports earlier in the day, Toshiba's board of directors made a decision to sell its chip-making unit to the consortium for about 2.4 trillion yen (US$21 billion).

Toshiba said it had been negotiating with three potential groups to sell its memory business.

Bain Capital has partnered with South Korea's SK Hynix Inc and brought in U.S. buyers of Toshiba chips such as Apple and Dell to bolster its bid.

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-South Korean syndicate with its joint venture partner Western Digital Corp. now out of the running, sources with knowledge of the matter said Wednesday. Under the agreement, Bain, Toshiba, SK Hynix Inc. and Japan's Hoya Corp. will pay about 960 billion yen for common and convertible stock, while Apple, Dell, Kingston Technology Co. and Seagate Technology Plc will spend about 440 billion yen for convertible and non-convertible preferred stock, the person said. The people declined to be identified as they were not authorized to speak on the matter.

After struggling due to a financial crunch caused by its now-bankrupt U.S. nuclear arm Westinghouse Electric, the Japanese chipmaker put its memory chip unit up for sale early this year.

The deal follows a period of uncertainty in which Toshiba was negotiating with a number of groups and, reportedly, also considering changing its mind about selling the unit.

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The chip business is responsible for Toshiba's wide array of memory solutions, which include its latest high-efficient 3D NAND technology which has high use cases in modern smartphones, servers, and other major devices. Rather, it said two Japanese state-backed investors - the Innovation Network Corp of Japan and the Development Bank of Japan - were considering a future capital tie-up. Turning its back on a proposed deal led by Western Digital, Toshiba is set to make around $22 billion from the sale.

A representative for Western Digital was not immediately available for comment. The Bain deal doesn't give Apple direct control over Toshiba's memory production, but it does put the company in a strong position when it comes time to buy more chips for its products.

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