Toshiba Picks Government-Led Group to Purchase Chip Unit

Toshiba Picks Government-Led Group to Purchase Chip Unit
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Toshiba has undergone massive losses for several months and is looking to sell its chip unit. After obtaining bids for several weeks, it has chosen a consortium of Japanese Government Investors and Bain Capital as their preferred bidder for the purchase of the chip unit.

Toshiba is rushing to sell the unit to cover billions of dollars in cost overruns at its bankrupt Westinghouse nuclear unit and to dig itself out of negative shareholders’ equity that could lead to delisting.

The consortium has offered around 2 trillion yen, which is roughly about $18 billion. This is a little less than an offer of 2.2 trillion yen that was offered by a rival U.S. company called Broadcom and partner equity firm Silver Lake. However, the Government and Bain consortium, although awkwardly conceived, is seen as the most appropriate choice by many analysts as it would automatically gain government approval and keep the technology under domestic control. A group of analysts, however, also doubt whether the consortium will provide the necessary leadership that the chip unit needs.

“There are many parties involved in this consortium. It has undergone so many twists and turns during its formation process, that I’m skeptical about whether it can promptly make bold decisions. In that sense, Broadcom or Foxconn would be better suited,” said Atsushi Osanai, a professor at Waseda University Business School.

Toshiba said in a statement it took into consideration concerns about technology transfers, job security for its domestic workforce, and prospects of clearing regulatory reviews in its decision.

Megha Shah for TechFunnel.com


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Megha Shah
Megha Shah
A dreamer, traveler, aspiring entrepreneur and a bookworm beyond repair, Megha Shah is extremely fond of writing and has been doing so since she was a child. Apart from being a part-time writer, Megha is currently in college, pursuing B. Com. (Hons). Megha is an ardent follower of ‘Hardship, Hustle and Heart’ and firmly believes in the power of hard work and destiny!

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