Led by Bain Capital, the consortium includes technology giants Apple, Dell, SK Hynix and Japan’s Hoya Corporation. Bloomberg reports that Toshiba will still maintain a stake in this memory business.
With the sale, Toshiba expects to recoup the billions of dollars of losses it made with its U.S. nuclear business. If the deal closes by March next year, the Japanese company could regain a positive net worth by the end of its fiscal year.
According to Bloomberg, Apple played a central role in resolving the tumultuous auction, which is still being interfered by former partner Western Digital Corp, claiming veto rights and suing Toshiba for that matter.
The Bain agreement calls for the sale to go ahead even though the litigation is unresolved. If that is the case, Toshiba will not transfer its three joint ventures with Western Digital to the acquirers and the purchase price will be adjusted accordingly, unless the transfer of the memory business itself is blocked by injunction.
The acquisition will be funded by 350.5 billion yen from Toshiba, 212 billion yen from Bain and 27 billion yen from Hoya. Hynix will invest 395 billion yen, while U.S. investors will add 415.5 billion yen. The acquiring special purpose entity, Pangea, also intends to secure loans of about 600 billion yen.
Under the agreement, Japan’s Toshiba and Hoya will hold a majority of Pangea’s stock. The US investors will not acquire any common stock or voting rights. Hynix has agreed not to increase its stake beyond 15 percent for 10 years.
Among the US investors, Apple wants to secure flash memory chips for its iPhones and iPads in the hope to distance itself from leading flash memory provider Samsung Electronics. The deal may give Apple a bit more negotiating power while maintaining some level of competition in the memory chip market where only few players can invest in leading edge technology and costly fabs.