Apple mulling $3B investment in Bain bid for Toshiba chip business, report says

Posted:
in General Discussion edited September 2017
In what could be Apple's largest single outside investment since its acquisition of Beats, the company is supposedly in discussions to put up around $3 billion toward Bain Capital's bid for Toshiba's memory chip business.




Citing sources familiar with the matter, Bloomberg reports Apple is in talks to provide capital to Bain for an equity stake in Toshiba's chip business, a move designed to shift sentiment away from a group backed by Western Digital.

Toshiba is looking to offload its memory chip unit to offset more than $9 billion in losses tied to its U.S. nuclear operations run under the brand Westinghouse. In order to remain listed on the Tokyo Stock Exchange, Toshiba needs to raise funds by March 2018, but the chip business sale is woefully behind schedule.

Apple's new commitment convinced Toshiba to sign a memorandum of understanding with Bain as the firms work toward inking an official agreement this month, the report said.

For Apple, the decision to back Bain is in part due to the strategic importance of Toshiba's memory production resources, sources said. With a stake in Toshiba, Apple would secure a constant supply of flash memory, a valuable commodity component used in iPhone, iPad and other devices. The importance of consistent flash memory supply was evidenced this week when Apple raised the price on high-capacity iPad Pro configurations.

Toshiba selected Bain's consortium as its preferred bidder in June, with an offer of 2.1 trillion yen ($19.1 billion) on the table. At the time, the state-backed Innovation Network Corp. of Japan and Development Bank of Japan were part of Bain's group, though both pulled out in the face of legal threats from Western Digital.

Japan's Ministry of Economy, Trade and Industry later pushed Toshiba to take a counter offer from a consortium led by U.S. equity firm KKR that includes Western Digital among its members, the report said.

Confusing matters, Toshiba and Western Digital jointly run a chip factory central to the memory unit deal. The two companies fought over the facility in a pair of lawsuits earlier this year. Western Digital was first to lob allegations of illicit distribution of trade secrets against Toshiba, with the Japanese company firing back claiming Western Digital was attempting to interfere with the sale process.

A Reuters report in late August seemingly corroborates some of today's claims, but had Apple ponying up $3.6 billion as part of a Bain bid worth around 2 trillion yen.

Most recently, the Nikkan Kogyo on Monday said Toshiba had accepted a 2 trillion yen bid from Western Digital's alliance, but Reuters refuted the report, saying talks had stalled. Instead, the publication said Toshiba was favoring the Bain-led group which includes Apple, Dell Inc., Seagate Technology and SK Hynix.

Seemingly out of the running, at least for now, is a consortium led by Foxconn. That group, to which Apple is also attached, last week proposed a $19 billion deal that would give Apple a 20 percent share of Toshiba's memory division.

Comments

  • Reply 1 of 9
    It seems that there is a MOU for the Bain group bid
    https://www.bit-tech.net/news/tech/memory/toshiba-announces-sale-mou-with-bain-capital-sk-hynix/1/
    Now the bidding war will really intensify.

    If Apple put up a load of $$$ and it is successful will there be even the remotest chance that the Apple memory price gouging will get a little more reasonable?
    Somehow I doubt it.
     

  • Reply 2 of 9
    appexappex Posts: 687member
    Apple should not own a make of SSD, but bu the best at each moment, as now Samsung V-NAND is.
  • Reply 3 of 9
    Not a sexy topic to discuss but very important, if the deal goes through, a big chunk of Apple's supply chain will be in direct control of the company.  Apple is already great at securing this part of its supply chain as it is, but I think this will eliminate any supply risks for memory altogether.
    cali
  • Reply 4 of 9
    calicali Posts: 3,495member
    appex said:
    Apple should not own a make of SSD, but bu the best at each moment, as now Samsung V-NAND is.
    Except Apple could innovate more if they create their own memory from the ground up. 
    leavingthebigg
  • Reply 5 of 9
    What's there for Apple to be mulling about? Look at Amazon spending money like there's no tomorrow and each time they acquire some business the share price rockets up even higher. Apple paid $13B for Whole Foods and investors were cheering like crazy. Apple has more than enough money to acquire part-ownership in a useful memory business and they're simply mulling over a 3B amount. What is there for Apple to mull over if it involves getting a guaranteed memory supply at possibly lower prices? Why does every acquisition work out for Amazon yet Apple is always having some difficulties with acquisitions? I can see why Amazon is said to soon eclipse Apple in market cap value. Apple doesn't appear aggressive enough when it comes to acquisitions.
  • Reply 6 of 9
    I'm surprised there's isn't news of Apple buying into the western digital bid, so no matter who wins apples is involved 
  • Reply 7 of 9
    Private equity involvement = bad news for the tech industry. Those are companies that intentionally avoid publicly discussing how they make their money because a lot of it sounds like it shouldn't be legal. 
  • Reply 8 of 9
    What's there for Apple to be mulling about? Look at Amazon spending money like there's no tomorrow and each time they acquire some business the share price rockets up even higher. Apple paid $13B for Whole Foods and investors were cheering like crazy. Apple has more than enough money to acquire part-ownership in a useful memory business and they're simply mulling over a 3B amount. What is there for Apple to mull over if it involves getting a guaranteed memory supply at possibly lower prices? Why does every acquisition work out for Amazon yet Apple is always having some difficulties with acquisitions? I can see why Amazon is said to soon eclipse Apple in market cap value. Apple doesn't appear aggressive enough when it comes to acquisitions.
    There used to be a time when Amazon announced quarterly losses even with billions of dollars in sales and the stock would go up. Not until very recently did this change. IF Apple had spent $13B for Whole Foods, there is no doubt in my mind, Apple's stock would have nose dived because Wall Street would have seen the move in a very negative light. Amazon's value is sitting at $477.9B while Apple's value is sitting at $822.6B. Even with Wall Street's well-practiced stock manipulation abilities there is no way in hell Wall Street can demolish Apple's reputation and value while increasing Amazon's reputation and value to have Amazon beat Apple to a $1T value. The only way something like this could happen is if Apple screwed up its own reputation, which would give Wall Street the ammunition to go after Apple. 
  • Reply 9 of 9
    Good. Toshiba needs cash due to some Bad Things that happened and it is a much safer investment than the companies based in South Korea.
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