Toshiba inks deal to sell memory biz to global consortium

Japanese tech giant Toshiba Corp. said Thursday it signed off on a deal to sell its memory business to a global consortium which includes South Korea's SK hynix Inc.

Toshiba earlier decided to start negotiations on selling its memory business to the consortium including participants from South Korea, the United States and Japan. The companies also include Bain Capital, Apple Inc. and Dell Inc., and a handful of other tech firms.

The deal is estimated to be worth 2 trillion yen ($17.6 billion).

Toshiba said it will sell all shares of Toshiba Memory Corporation to Pangea, a special purpose acquisition company formed by a Bain-led consortium.
 

The consortium, Toshiba, and Hoya Corp. will each hold stakes of 49.9 percent, 40.2 percent, and 9.9 percent, respectively.

"SK hynix will be firewalled from accessing proprietary Toshiba Memory Corporation information and will not be permitted to own more than 15 percent of the voting rights in Pangea or TMC for a period of 10 years as provided by the terms of the agreement," Toshiba said.

South Korea's No. 2 chipmaker SK hynix said Wednesday its board of directors approved a plan to inject 4 trillion won ($3.5 billion) in the acquisition plan.

Of SK hynix's investment, 1.3 trillion won, or 129 billion yen, will be invested to buy Toshiba's convertible bonds, which will help the firm secure a solid stake in Toshiba's memory business.

SK hynix also plans to chip in the remaining 2.7 trillion won, or 266 billion yen, in a fund established by Bain Capital as a limited partner, which can help the South Korean company enjoy capital gains when the Toshiba business is listed.

"With Toshiba and Hoya's investments, Japan-based companies will hold more than 50 percent of the common stocks in Pangea, and going forward Japan-based companies will continue to hold a majority," Toshiba said.

"After the TMC shares are transfered to Pangea, Bain Capital and TMC management will lead TMC's business operations to secure continuous growth," it added.

Toshiba added the deal is anticipated to be completed on March 30, 2018.

Industry watchers, meanwhile, said the clause limiting participation of SK hynix will restrict the South Korean company's benefit from being part of the consortium.

SK hynix agreed to take part in the purchase in an apparent bid to beef up its competitiveness in the NAND flash segment, which is anticipated to post sharp growth down the road.

Others said SK hynix will still be able to benefit from the deal through technology exchanges.

The 1.3-trillion won investment on convertible bonds is not seen as being a major burden for SK hynix as its annual facility investment stands at around 9.6 trillion won, they added. (Yonhap)