Toshiba deal is under the dark clouds

Toshiba deal is under the dark clouds


The Japanese technology company Toshiba sells its chip division to a consortium involving Bain Capital, Apple, Dell and Hynix. The Japanese will receive about 18 billion dollar. Even though that price is not yet 100 percent fixed due to legal problems.

Toshiba has been trying to sell its chip division for several months, but it had more feet in the earth than thought. The company broke down the department in April of this year and prompted the store to suffer losses from its subsidiary Westinghouse Electric Co, which went bankrupt earlier this year.

For the sale there was a lot of interest in the technology industry. Initially, it seemed that the investment fund Bain Capital would win the deal, together with some Japanese government funds. For the Japanese government, that was important because in this way, Toshiba’s intellectual property would remain secured in the country.

However, that agreement did not go through because Western Digital challenged the sale. Western Digital holds major stake in Toshiba’s chip division, but disagrees with the divestment of the company and said it had a veto right. The Americans are therefore committing an arbitration case in California.

The two Japanese government funds left the table. For Apple, who previously formed a consortium with Foxconn to bid, it was the signal to make a new attempt to get in the chip division. Together with Dell, Seagate, Hynix, Hoya and Bain Capital, it is now the longest end.

However, the legal problems surrounding the deal are not overlooked, as Western Digital’s lawsuit continues to run. Western Digital also claims that the presence of another memory chip manufacturer in the consortium (South Korean Hynix) increases the chances of its business secrets getting in the wrong hands. It may be that the judge who decides that the business areas where Western Digital is specifically active is not allowed to be sold. That would also affect the final price of sales. Another possible outcome is that the court declare the sale completely illegal.

For Apple, the transaction is very important because the company wants security about the delivery of memory chips for, among other things, its iPhone.

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Javier Davis produces news on stocks, currencies, bonds, commodities, and real estate. His in-depth research covers most of the major financial markets in America, Europe, and Asia. His research is based on the interconnected relationships among economic and technical factors that drive valuations in the markets, with an emphasis on how to formulate investment strategies. From interest rates to inflation to economic growth and much more, the fundamental concepts presented on this website provide an essential foundation of knowledge for investors to profit in stocks, bonds, commodities, currencies, and real estate markets.