Toshiba favors Bain group for chip sale; Western Digital talks stall

Technology

Technology

Toshiba also denied an earlier report from Asahi Shimbun, a widely respected newspaper in Japan, that also said Western Digital had won the bidding process.

Toshiba is hoping to quickly sell the chip unit to cover up massive losses stemming from its now-bankrupt US nuclear unit. Sundry Japanese companies would hold 40.1 per cent, enabling the consortium to argue that Toshiba Memory Corporation remains in Japanese hands.

Yoshimitsu Kobayashi, an external Toshiba director, said at a press conference on Tuesday at the Keizai Doyukai group of corporate executives, that though the deadline is important, it is also important that negotiations head in a good direction.

The Bain Capital-led group also includes the state-backed Development Bank of Japan and South Korean chipmaker SK Hynix.

Cowen and Company reiterated their outperform rating on shares of Western Digital Corporation (NASDAQ:WDC) in a research report report published on Saturday, August 26th. No financial terms were provided by the unit has attracted bids in the region of $18 billion USA dollars, according to previous reports.

The Japanese conglomerate, which needs to sell the chip business to plug a huge hole in its finances, had been trying to seal a deal by Wednesday with the Western Digital group but now hopes to reach agreement with the Bain group by next week, said the sources, who declined to be identified as the talks were private. Unless it sells Toshiba Memory by next March to cover the losses and eliminate its negative net worth, it will face a forced delisting from the Tokyo Stock Exchange.

To speed up lengthy antitrust screenings, Western Digital had offered to not make initial investments in Toshiba Memory, planning to take voting rights of less than 16 percent when the chip business goes public. Western Digital's thought to have since retracted part of its bid.

All three bidder groups have roped in major chip buyer Apple Inc (AAPL.O) to bolster their offers, sources have said. Western Digital Corporation now has a consensus rating of "Buy" and an average target price of $111.34.

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