Western Digital Corp (NASDAQ:$WDC) has officially voluntarily dropped out of a group bidding for Toshiba’s (NASDAQ:$TOSBF) coveted flash memory chip, in favor of opting for a stronger position in their joint venture.
WDC’s removal may mean that Toshiba can finally seal the deal, which has taken many months, seeing funds needed to cover billions of dollars in liabilities arising from the failure of its nuclear power engineering subsidiary, Westinghouse.
What did the bidding number look like? According to insider sources, a consortium of offers from Western Digital, U.S. private equity firm KKR & Co (NASDAQ:$KKR), the state-backed Innovation Network of Japan and Development bank of Japan were close to around 1.9 trillion, or $17.4 billion for the chip business.
However, the deal had been delayed for weeks due to disagreements regarding Western Digital’s stake in the business. Toshiba, specifically, feared prolonged antitrust reviews.
Eventually, WDC stated to Toshiba that it is willing to pull out of a consortium business in favour of their joint venture program at Toshiba’s key plan in central Japan, which is the world’s second and third largest producers of NAND memory chips just after Samsung Electronics Co (NASDAQ:$SSNLF). Toshiba is predicted to jointly invest in a new production line with WDC.
If the sale is delayed, Toshiba will likely report negative equity for two years in a row, increasing the chances of its shares being unlisted. But to further increase the drama, private equity investors Bain Capital offered a last minute re-submission of a 2 trillion- yen offer, bringing in Apple Inc (NASDAQ:$APPL) to bolster its bid.
While time is of the essence for Toshiba, the company will look to reach a final decision within the next week.
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