Western Digital would consider Japan partners for Toshiba chip unit bid

Reuters

The state-backed fund Innovation Network Corp of Japan is looking at the auction of Toshiba Corp's (6502.T) chip unit but did not participate in first-round bidding, INCJ Chairman Toshiyuki Shiga said on Tuesday.

A bid from INCJ – a Japanese government-backed fund - along with Development Bank of Japan would appeal to the Japanese government, which does not want Toshiba's chip technology to fall into the hands of overseas companies, especially the Chinese.

Hon Hai Precision Industry has asked SoftBank for cooperation in its bid to acquire Toshiba's chip unit, sources close to the matter told Kyodo News.

Toshiba is selling the memory business, which it this month spun off as a separate unit, to help cover billions of dollar in write-downs from its USA nuclear unit Westinghouse Electric Co, which filed for U.S. bankruptcy protection from creditors last month.

Toshiba has narrowed the field of bidders for its chip unit to four suitors, Broadcom partnered with private equity firm Silver Lake; SK Hynix; Western Digital and Foxconn.

There's an opportunity for Western Digital to maybe use INCJ money to bulk up its own bid, and also use the joint venture contract's terms and lawyers to keep the other bidders out.

Western Digital, which operates a flash memory chip plant with Toshiba in Japan, has discussed antitrust issues with the conglomerate, and both agreed they shouldn't be an obstacle to a Western Digital bid, Long said.

Sources have said flash memory competitors such as Western Digital may find it hard to clear regulators' antitrust reviews by March next year, the deadline for Toshiba to resolve its negative shareholders' equity and stay listed on the Tokyo stock exchange.

The business is run as a joint venture with Western Digital under a deal that is said to give the USA company exclusive negotiating rights over any acquisition of Toshiba's stake.

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