Apple joins $18bn bid for Toshiba chip unit

Natalie Bannerman
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Bain-led consortium adds Apple into its bid for Toshiba memory chip division

Bain Capital has made a last ditch attempt to close the $18 billion deal for Toshiba’s chip business unit, by adding Apple to the syndicate of purchasers.

Toshiba has been attempting to try and sell its chip business, due to billions lost in its US nuclear business Westinghouse, which has gone bankrupt.

Sources spoke to the Reuters news agency confirming that this new offer comes as the Toshiba and Western Digital, its joint venture partner for its chip business, are struggling to close a deal.

Things are so tumultuous between the two, that Toshiba is favouring external bids over that of its partner, which Western Digital has said will pursue legal action over if any deal if accepted without its consent.

The new deal worth $18.2 billion will see Bain and South Korean chipmaker SK Hynix raise $9.9 billion, Japanese banks will contribute $54 billion, leaving Apple to raise $36 billion in funds. The source adds that Toshiba has been called to be a part of the deal investing $18 billion.

This would beat the $17 billion proposal offered by the Western Digital-led consortium, which includes US private equity firm KKR. However sources have said that Western Digital is working to get its proposal up to the same figure as Bain’s.

Strategically, the deal would mean that Apple would no longer need to rely on Samsung for its memory chips, who are also a key competitor to the firm in the smartphone business. Toshiba and Western Digital combined could be as a large as Samsung’s memory division.

Frank Gillett, an analyst with market research firm Forrester, believes that Apple needs to keep as many chip suppliers as possible in the market to keep prices competitive, or as he put it: “Apple is so big they need to multi-source.

A previous deal, led by Bain was chosen by Toshiba as its preferred bidder but was blocked by Toshiba over its reluctance to do a deal in the face of Western Digital’s legal threats.

This time however, Bain has come up with a work around and has invited state-backed investors the Innovation Network of Japan and the Development Bank of Japan, to invest in the business once any legal issues with Western Digital is settled.

Due to all bids taking place in private, no companies have given an official statement on the matter.