Toshiba Planning to Buy Back Memory Unit Shares Purchased Last Year by Apple and Others

Last June, Toshiba completed the sale of its memory chip unit to a global consortium of companies led by Bain Capital and including Apple, Dell, Kingston, and Seagate Technology. Today, The Wall Street Journal reported that Toshiba is now set to buy back these shares under a refinancing plan.


Specifically, the four companies (excluding Bain Capital) are set to sell their preferred shares back to Toshiba for about $4.5 billion by the end of the month, and together they made a few hundred million dollars on the investment in Toshiba. Toshiba received the capital to buy out the companies from Japanese banks, totaling $11.8 billion.

Looking ahead, the company is now planning to become publicly listed in Tokyo near the end of 2019 or the beginning of 2020. Toshiba's plan to re-acquire its memory chip unit comes over two years after it first announced plans to sell the unit in January 2017, followed by bidding for the unit that began in March 2017.

The Bain-led consortium eventually prevented Western Digital from taking control of Toshiba's memory chip business, which at one point threatened legal action against Toshiba. Apple eventually joined a "last ditch" effort to win the bid with Bain Capital, which will remain a majority owner of the memory chip unit even after Toshiba buys back its shares from the other four companies.

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Toshiba Completes Sale of Flash Memory Unit to Investment Group That Includes Apple

Toshiba has completed the $18 billion sale of its memory chip unit to a global consortium that includes Apple, almost nine months since it announced that the deal had been agreed (via Reuters).

The Japanese firm had originally planned to wrap up the sale by mid-March, however a lengthy review by Chinese antitrust authorities didn't finish until last month. Toshiba confirmed this week that ownership of the NAND flash memory unit had finally changed hands.

"Toshiba hereby gives notice that the closing of the sale has been completed today as scheduled," the group said in a statement on Friday.
The investment consortium led by Bain Capital includes Apple, Dell, SK Hynix, Kingston, and Seagate Technology. Toshiba retains a 40 percent ownership of the unit as part of the agreement.

Toshiba first announced plans to sell its NAND flash memory unit in January of 2017 in order to raise funds to cover several billion dollars of losses associated with its U.S. nuclear subsidiary, Westinghouse. Bidding for the chip unit first kicked off in March of that year, with the manufacturer fielding bids from multiple interested parties.

Three bidding groups originally competed to take over the lucrative chip unit, with Bain eventually winning out. Apple actually participated in all three bids, demonstrating its keenness to protect its supply of Toshiba flash memory, which it already uses in iPhones and iPads. Apple is thought to have contributed around $3 billion to the Bain deal, giving it around a 16 percent stake.

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Toshiba Signs $17.7 Billion Deal to Sell Memory Chip Unit to Bain-Apple Group

After lengthy negotiations, Toshiba this morning officially agreed to sell its lucrative memory chip unit to a global consortium that includes Apple, in a deal reportedly worth $17.7 billion (via The Wall Street Journal).

Toshiba said the legally binding agreement ensures the chip unit will remain a Toshiba affiliate even after it has become the property of the Bain Capital-led group, which includes Apple, Dell, Seagate, Hoya, and SK Hynix.


Toshiba and Bain want to get the deal done by the end of March, despite ongoing litigation with Western Digital, which jointly operates the memory business with Toshiba. Western Digital claims it has the right to vote on the sale. Another hurdle is receiving antitrust clearance, which could take six months or longer, according to WSJ.

Toshiba originally announced it would sell its NAND flash memory unit in January 2017 to raise funds to cover huge losses associated with its U.S. nuclear subsidiary, Westinghouse. Toshiba wants to close the deal to raise the cash by March so it can remain listed on the Tokyo Stock Exchange.

Several companies, including TSMC, Foxconn, Amazon, Google, Broadcom, and a range of private equity firms entered bids this year in an effort to get a piece of the memory chip unit.

In a statement given to Reuters on Thursday, SK Hynix said the Bain-led group will hold 49.9 percent of the voting rights in the chip unit, while Toshiba will hold 40.2 percent and Japan's Hoya Corp will own 9.9 percent. Apple, Dell, Seagate, and Kingston Technology will invest in the form of non-convertible preferred shares, it said.

SK Hynix also revealed it will invest 395 billion yen ($3.5 billion) in the unit. Other companies declined to comment, but individual investments are believed to be 350.5 billion yen ($3.11 billion) from Toshiba, 212 billion yen ($1.88 billion) from Bain, and a combined 415.5 billion yen ($3.68 billion) from Apple, Dell, Kingston, and Seagate.

Apple has been interested in the memory chip unit because NAND flash is an essential component of its iPhones and iPads. Only a handful of companies make the chips and the dominant player is Samsung, Apple's biggest rival in the smartphone industry.

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Toshiba to Sell Memory Chip Unit to Consortium That Includes Apple

After months of negotiations, Toshiba has decided to sell its memory chip unit to a global consortium that includes Bain Capital, SK Hynix, Dell, and Apple, reports Reuters.

No official announcement has been made by Toshiba as of yet, but the company is expected to announce the sale on Wednesday. As of Tuesday, Toshiba was said to be leaning towards a group backed by Western Digital, but Western Digital is said to have failed to agree to some of Toshiba's terms regarding limits on WD's future stake in the business.


Western Digital may still attempt to block the sale and is said to be prepared to seek a court injunction to stop it. Western Digital previously invested in Toshiba's semiconductor plant and claims its consent is required for the sale.

Toshiba first announced plans to sell its NAND flash memory unit in January of 2017 to raise funds to cover losses associated with its U.S. nuclear subsidiary, Westinghouse. Many companies, including TSMC, Foxconn, Amazon, Google, Broadcom, and a range of private equity firms entered bids in an effort to get a piece of the memory chip unit.

The consortium, led by Bain Capital, was selected as the preferred bidder in June, and in September, entered a higher bid amid fierce competition. Apple, SK Hynix, Dell, and Bain Capital are said to have offered a combined 2.4 trillion yen, equivalent to $22 billion, along with an additional 200 billion yen for infrastructure.

As of early September, Bain and SK Hynix were said to be providing a total of 567.5 billion yen, while Apple was reported to be offering 335 billion yen, equivalent to $3 billion. That sum is in line with reports suggesting Apple was prepared to spend several billion dollars for a "substantial stake" in the memory business.

Bain, Apple, Dell, and SK Hynix will own a combined 49.9 percent stake in the chip unit, with Toshiba keeping 40 percent and Japanese firms controlling the other 10.1 percent should the sale go through.

Apple already uses Toshiba's flash memory in its products. The iPhone 7 and iPhone 7 Plus include memory sourced from both Toshiba and SK Hynix.

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