Toshiba Corporation finally completed the sale of its memory business, Toshiba Memory Corporation, to a consortium led by Bain Capital Private Equity, LP. SK Hynix, Apple Inc., Dell Technologies, Seagate Technology, and Kingston Technology are also part of the deal.
Toshiba Corporation put its memory business on the market last year following a series of critical missteps that left it in financial woes. In 2015, the company was embroiled in a $1.2 billion accounting scandal that left it in hot water with the Tokyo Stock Exchange. Shortly thereafter, Toshiba Corporation’s U.S.-based Westinghouse Electric nuclear plant subsidiary faced “several billion dollars” of cost overruns that left its parent company with no choice but to sell part of its business to pay the bills.
Toshiba agreed to sell its memory business to the Bain-led consortium last year, but Western Digital stepped in to hold back the sale for fear it would be pushed out of the NAND business that it invested in with the purchase of SanDisk in 2016. Toshiba and Western Digital-owned SanDisk share stakes in three joint manufacturing joint-venture companies, and equity stakes in Flash Partners, Ltd., Flash Alliance, Ltd., and Flash Forward LLC. In December, Toshiba cut a deal that satisfied Western Digital’s concerns, and the company dropped its legal action to block the sale.
With Western Digital out of the way, the Bain-led consortium moved forward with the sale. The group created a special interest company called K.K. Pangea, which purchased all shares of the Toshiba Memory Corporation from Toshiba Corporation for an agreed 2 trillion, 300 million yen (approximately $18 billion) based on the estimated dept, working capital, and accumulated capital expenditure numbers. In March, Toshiba received an initial dividend of 118 billion yen ($1.077 billion). The two parties will adjust the final figure once a true account is completed.
Toshiba Isn’t Out Of The Ring Yet
Toshiba didn’t relinquish complete control of its memory business, though. Following the sale of Toshiba Memory Corporation, Toshiba Corporation repurchased 40.8% of the company from Pangea for 350.5 billion yen ($3.194 billion). Toshiba Corporation’s repurchase gives it approximately 40% of the voting rights, which gives it substantial power within the new company structure.
That's what Bain Capital usually does... Why would this be any different?