Bain Seeks $7 Billion From Apple for Toshiba Chips Bid

EghtesadOnline: Bain Capital is seeking more financial support from Apple Inc. as it tries to seal its acquisition of Toshiba Corp.’s memory chips business, according to a person familiar with the matter.

News ID: ۷۴۳۸۶۵

20 September 2017

The U.S. buyout firm is now asking the iPhone maker for about $7 billion in capital, up from a previous agreement for about $3 billion, said the person, who asked not to be identified because the matter is private. The revised proposal would include about $1 billion for equity and $6 billion in debt, the person said, a part of a total bid of roughly $19 billion. Apple representatives did not immediately respond to requests for comment.

According to Bloomberg, Toshiba’s board is meeting Wednesday in Tokyo to sort through competing offers for its memory chips unit, the most valuable asset at the Japanese conglomerate. Bain is competing against a group that includes KKR & Co. and two state-backed funds, Innovation Network Corp. of Japan and Development Bank of Japan.

Toshiba signed a memorandum of understanding with Bain last week, with the goal of reaching a final deal before the end of the month. But the MOU didn’t preclude Toshiba from continuing to negotiate with other bidders and the KKR group is working out a revised bid.

INCJ has taken a more prominent role in the consortium and now plans an initial investment of about 550 billion yen ($4.9 billion), up from the previous 300 billion, said other people familiar with the matter. The total INCJ-KKR bid is about 1.9 trillion yen, they said, less than what the Bain group is offering.

Under the revised proposal, Toshiba could buy back equity from INCJ and DBJ later, the people said. Also key to the KKR-led offer is about $6 billion in debt financing from Toshiba’s banks. Bain, trying to retain momentum, is seeking about the same about of debt financing from Apple.

Toshiba has been in negotiations for months to sell off its chips business and pay for a disastrous move into the U.S. nuclear business. 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 Corp., 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.

Western Digital had originally partnered with KKR in an offer for the chips business. But Western Digital agreed to withdraw from that consortium because of opposition from Toshiba, people familiar with the matter have said.

Apple originally decided to back Bain because of the business’s strategic importance, the people said. Apple depends on flash memory from Toshiba in its iPhones and iPads, and wants a continued supply so it’s not dependent on rival Samsung Electronics Co., the largest maker of such chips.