April 26, 2024

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[THE INVESTOR] Korean chipmaker SK hynix and US private equity firm Bain Capital have reportedly offered less than 2 trillion yen (US$18 billion) to acquire Toshiba’s chip business unit in the second bidding round, industry sources said on May 19.

“The two firms participated in the May 19 bid together,” said a source briefed on the matter. “But their bidding price was lowered at the last minute considering growing uncertainties surrounding the deal.”

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Cash-strapped Toshiba has hoped to reap more than 2 trillion yen from the stake sale amid a heated bidding war involving global tech and financial companies.

Industry watchers had speculated that the SK consortium would raise the bidding price, possibly higher than 2 trillion yen, to win the lucrative deal.

“It is also likely that SK hynix and Bain want to lower the takeover price by offering a lower-than-expected price,” another source said, predicting they could raise the price in the next round. 

SK hynix said in a regulatory filing on May 19 that it would join the final bidding process with its investment partners.

Toshiba’s plans to sell its memory chip business division is facing difficulties as Western Digital, the Japanese chipmaker’s manufacturing partner, recently filed an arbitration request at the International Chamber of Commerce to halt the sale claiming its exclusive negotiation rights.

Nikkei Asian Review reported earlier that Bain is seeking to acquire at least 51 percent of the total stake while the Korean chipmaker is funding the deal to avoid direct involvement over antitrust concerns.

SK hynix has been making all-out efforts to win the bid. In April, SK Group Chairman Chey Tae-won visited Tokyo to meet Toshiba’s top brass. SK Telecom CEO Park Jung-ho who is leading the talks also traveled to Japan and the US last week to meet investors.

Despite its strong presence in DRAM chips, SK hynix has yet to secure a firm footing in NAND chips whose demand is soaring for long-term data storage for Internet of Things, big data and cloud services.

By attaining Toshiba’s NAND business, the Korean chipmaker aims to gain access to the Japanese rival’s advanced manufacturing technology and eventually become the No. 2 player in the NAND market.

Equipped with abundant cash reserves, the nation’s third-largest conglomerate has been making all-out efforts to attract Japanese allies, including Development Bank of Japan, in order to soothe the local government’s concerns over tech leaks to Chinese or Korean chip rivals.

By Kim Young-won (wone0102@heraldcorp.com)