decor decor
"Better three hours too soon than a minute too late."

-William Shakespeare

Toshiba Memory Enters Memorandum of Understanding with Bain Capital

Financial Information
  • Terms Not Disclosed
Transaction Facts
  • In light of private equity firm Bain’s new proposal, Toshiba announced today that it has entered into a non-binding MoU with Bain for the sale of its chip unit Toshiba Memory Corporation (TMC). Both parties intend to negotiate a mutually satisfactory definitive agreement for the sale of TMC, which is speculated to be at ~$20B, by the end of September.
  • Toshiba failed to meet its self-imposed deadline to find a buyer for TMC on August 31. If Toshiba does not secure new capital by March 2018, it could have its shares delisted from the Tokyo Stock Exchange.
Continuing the High-Stakes Bidding War
  • Costly Trade-Off: Toshiba announced plans in March to sell up to 100% of its highly valuable chip business in order to offset a $6.3B write-down from its majority-owned nuclear reactor unit, Westinghouse Electric Co. — Westinghouse filed for bankruptcy in the U.S in on March 29. From the outset, Toshiba and the Japanese government made clear their preference for a domestic buyer.
  • More Competition: While the company favors Bain, Toshiba has stated its right to welcome new offers and negotiate with other bidders. The three major bidding groups that have come forward are: a consortium led by Bain that includes Apple, Seagate Technologies, SK Hynix, Innovation Network Corp. of Japan, and Development Bank of Japan; a consortium led by Western Digital; and a consortium led by Foxconn.
  • Change of Tide: Just up until two weeks ago, Western Digital had been in the front running, amidst expansion of its cloud capabilities with two smaller acquisitions. After the announcement of Toshiba’s MoU with Bain, Western Digital stated, “We are disappointed that Toshiba would take this action despite Western Digital’s tireless efforts to reach a resolution that is in the best interests of all stakeholders.” The combination of Western Digital and Toshiba could create a market share of over 30% in the growing NAND flash memory market, which hit $36.7B last year and will grow 40% until 2021, Samsung Electronics is the leader of the pack; Samsung’s market share stands at 36.7%, whereas Toshiba’s market share fell 4.5 percentage points to 17.2% and Western Digital’s fell 0.5 percentage points to 15.5% in the first quarter of this year.
  • Not Just About Numbers: Toshiba is considering more than just selling to the highest bidder. Earlier in April, Taiwan-based Foxconn, the world’s largest contract electronics maker and supplier for Apple, submitted the highest bid at ~$27B, but Toshiba is favoring Bain at this point in time. Foxconn stated that it has not yet given up, as it proactively has been looking to move past being merely a manufacturer. Foxconn has been eyeing companies with higher margins, taking control of 100-year-old Japanese electronics company Sharp Corp. last August, when it bought two-thirds of the company for $3B.
For more information about this development, click here to read the press release.
martinwolf was not the advisor in this transaction.
previous post Back to Articles next post

31 Jan 2023

Rising Interest Rates Chill Private Equity Pace

After a year of strength on the private equity front, 2022 is now in the rearview mirror and industry professionals anticipate a downgrade in performance for the coming year.   Despite the fluctuations of the past few years, private equity has withstood the challenges relatively well. However, in certain areas such as exit activity and...

18 Jan 2023

IT Industry Titan John McKenna Announces Retirement 

Congratulations to John McKenna, CEO of ConvergeOne, who announced his retirement today after 14 years at the helm. John has been an integral part of the IT industry for more than 30 years, and his leadership, dedication, and hard work have set the gold standard as a titan in our industry.   John’s tenure at...

21 Dec 2022

Happy Holidays – The 2022 martinwolf Annual Letter

View a pdf of this letter here.    Dear Clients, Partners, and Friends, It’s hard to believe we are closing the books on our 25th year in business. Looking back at our extraordinary colleagues past and present, hundreds of clients, and a global network of buyers and friends, I want to start this year’s letter...