U.S. buyout firm Bain Capital LP plans to bid around 1.5 trillion yen ($13.5 billion) for a majority stake in Toshiba Corp's chip business, people with knowledge of the matter said. As Ciara Lee reports, other suitors are already waiting in the wings.
The suitors are lining up as the second round deadline for Toshiba's chip business nears. Sources say U.S chipmaker Broadcom, which has teamed up with private equity firm Silver Lake, and U.S. buyout firm Bain Capital which has partnered South Korean chipmaker SK Hynix, will bid. Private equity firm KKR is also thought to be in the running. Toshiba, which values its chip unit at at least 18 billion dollars, was forced to put its prized asset on the block this year. It suffered dramatic cost overruns at its now-bankrupt U.S. nuclear unit, leaving it scrambling for cash. Selling the chip unit is critical for the company's recovery. (SOUNDBITE) (English) JEREMY STRETCH, HEAD OF G10 FX STRATEGY, CIBC, SAYING: "Its ongoing future as a listed company on Tokyo equity indices is largely reflective on shoring up its balance sheet and dealing with these latent issues which obviously relate back to its Westinghouse holding. So it is necessary that the company needs to facilitate asset sales in order to boost its balance sheet. So as we get to the second deadline in terms of the bidding process it is clear that the company needs funds." Bain plans to bid around 1.5 trillion yen or 13 billion dollars for a majority stake, people familiar with the matter have said. The offer would allow Toshiba and the management of the memory chip business to own a sizeable holding. But much of the sale and its outcome is still uncertain. Business partner Western Digital - another suitor for the chip unit - is seeking to block any sale that does not have its consent. And the Japanese government has made clear that it's prepared to block any sale that could see highly valued chip technology leave the country.