Toshiba Corp has chosen a consortium of Japanese government investors and Bain Capital as the preferred bidder for its chip business, aiming to seal a deal worth some $18 billion by next week as it scrambles for funds to cover massive losses. Sonia Legg reports.
It's been a challenging few months for Toshiba executives but there is finally a little hope. A consortium of Japanese government investors and Bain Capital has been named as the preferred bidder for its prized chip business. It aims to seal a deal worth around $18 billion by next week. SOUNDBITE (English) JASPER LAWLER, SENIOR MARKETS ANALYST, LONDON CAPITAL GROUP, SAYING: "It looks like they've chosen, not the highest bidder, but the bid that makes the most sense for keeping technology within Japan and I'm probably also a decision relating to jobs as well. If it went to a competitor particularly a foreign competitor, there is a risk of job losses and Japan loses its influence that it has with Toshiba." Japan's government clearly had a hand in the decision. Home grown bidders perhaps spurred into action by the prospect of China's Foxconn or U.S. rival Broadcom running the prized business. (SOUNDBITE) (Japanese) JAPANESE CHIEF CABINET SECRETARY, YOSHIHIDE SUGA, SAYING: "Toshiba's semiconductor business is highly competitive globally. The matter is important in terms of maintaining jobs in Japan." There are still no guarantees. Toshiba's US partners Western Digital still insist the Japanese giant is in breach of its joint venture contracts. A court hearing is set for mid July. SOUNDBITE (English) JASPER LAWLER, SENIOR MARKETS ANALYST, LONDON CAPITAL GROUP, SAYING: "There's still a huge debt load that has to be paid. This deal obviously goes a long way towards that but there's still got to be a kind of confidence that the company itself has a future. If things don't progress over time the risk builds that actually the company needs to be broken up and sold off into more valued parts as pieces rather than as a whole." And time is not on Toshiba's side. It's still in negative shareholder equity after its nuclear unit Westinghouse went bankrupt. Investors hardly endorsed this latest news either - shares fell two percent.