Toshiba aims for chip deal with Bain by September 20

Bloomberg

Toshiba Corp. is aiming to finalise a deal to sell its memory chips business to a group led by Bain Capital at a September 20 board meeting, despite opposition from partner Western Digital Corp., according to people familiar with the matter.
Toshiba’s effort faces resistance because the Bain group now
includes several Western Digital competitors, including Seagate Technology Plc, Kingston Technology Co. and SK Hynix Inc., said the people, asking not to be identified because the matter isn’t public. Western Digital partnered with KKR & Co. to try to buy the chips business, but Toshiba opted for the Bain bid last week, signing a memorandum of understanding as they work toward a final agreement.
Toshiba has been in talks for months to sell its chips business and pay for a disastrous move into the US nuclear sector. The company needs to raise the money by March to avoid seeing its shares delisted from the Tokyo Stock Exchange. The auction has been complicated by legal action from Western Digital, which has argued it should have veto rights in any sale because of its partnership with Toshiba in the chips business. The Japanese company disputes that and sued Western Digital for more than $1 billion for interfering in the auction.
Toshiba’s board might not be able to reach a final deal this week and if not would revisit the issue the following week, said one of the people.
The KKR group, backed by Western Digital, was on the verge of winning the auction just weeks ago with support from Japan’s powerful Ministry of Economy, Trade and Industry, people familiar with the matter said at the time.

Apple Backing
Apple Inc. helped swing momentum away from Western Digital by backing Bain’s effort. The iPhone maker is in talks to provide about $3 billion in capital for the bid. If the agreement is completed, it may exceed Apple’s largest deal, the $3 billion acquisition of Beats Electronics LLC.
Apple is interested in the chip unit because of the strategic importance of flash memory. Nand flash memory chips are among the most expensive components of the iPhone and the market for the chips is concentrated in the hands of just six suppliers, with rival Samsung Electronics Co. holding more than 40 percent.
For the iPhone maker, Toshiba’s 18 percent falling completely into the hands of another supplier would further narrow its options and make pricing negotiations tougher.