The bidding war can come to an end. After seven months of negotiations, lawsuits, twists and turns, Toshiba bosses can breathe a slight sigh of relief. Penning an $18 billion deal, Toshiba has paved the way for a consortium led by Bain Capital and Apple to take over its memory unit.
The deal looked like it was done last week but Apple demanded new terms at the last minute sparking doubt that the deal would be complete. The consortium also includes SK Hynix, as well as Dell, Seagate Technology and Kingston Technology.
But bosses at Toshiba won’t be popping the champagne just yet. If we have learnt anything from this sale it will be that nothing about Toshiba appears as easy or plain sailing as it first appears. The company will now be scrambling to satisfy the March regulatory review, which usually takes six months to complete. Cutting it fine, if the deal does not close before then, Toshiba – hurt by liabilities at is now bankrupt nuclear unit Westinghouse – is likely to end a second consecutive year in negative net worth, putting pressure on the Tokyo Stock Exchange to strip it of its listing status.
The sale also faces legal challenges from Western Digital, Toshiba’s chip venture partner and rejected suitor, which is seeking an injunction to block any deal that does not have its consent. Western Digital’s attempts to block the deal shouldn’t come as a surprise though. Western Digital says that it has legal rights to block any deal made without its consent. An independent arbitration panel is set to be formed in the coming days, and an injunction could come later this year. A final ruling isn’t expected until at least 2019.
Western Digital’s apparent stubbornness stems from its $16 billion acquisition of SanDisk last year. SanDisk had been a joint venture partner with Toshiba since 2000. In a similar act, Western Digital last week filed an arbitration request to stop Toshiba from investing in a new chip facility unle SanDisk was also allowed to invest.