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Some news outlets reported that Western Digital was close to acquiring Toshiba's memory business, but that had not been finalized as of Tuesday:
Toshiba Corp now favors a group led by Bain Capital LP and SK Hynix Inc to buy its prized semiconductor business, as it failed to bridge key gaps with its business partner and rival bidder Western Digital Corp, two people briefed on the matter said on Tuesday.
The dramatic twist in the sale process, beset by legal wrangling and revised bids, comes just a day before Toshiba's latest deadline. The Japanese conglomerate, which needs to sell the chip business to plug a huge hole in its finances, had been trying to seal a deal by Wednesday with the Western Digital group but now hopes to reach agreement with the Bain group by next week, said the sources, who declined to be identified as the talks were private.
A Toshiba spokesman said the firm could not comment on details of the talks. The parties have already missed two deadlines by Toshiba's banks, which want a deal to pump $18 billion or more into the company to pull it out of negative shareholder equity and prevent it from being delisted. Yoshimitsu Kobayashi, an external Toshiba director, told reporters earlier on Tuesday that although the deadline is important, it is also important that negotiations head in a good direction.
Apple, a buyer of Toshiba's NAND chips, reportedly threatened Western Digital with a boycott of its products if it took complete control of Toshiba's memory business. But it did offer $460 million in acquisition financing for a group including WD as long as WD remained a minority investor.
Update: Toshiba says it favors a bid from a group led by Bain Capital, but is still open to better offers.
Toshiba to focus on chip talks with Bain, but doesn't rule out other suitors
Start the Bidding War, Toshiba
Previously: Broadcom and Japanese Government Considering Bid for Toshiba's Semiconductor Unit
Samsung Could Boost NAND Production Capacity, WD Intervenes in Toshiba Memory Sale
Toshiba Sues Western Digital as it Seeks to Sell its Memory Business to a Third Party
(Score: 2) by ledow on Thursday September 14 2017, @07:10AM (6 children)
"Apple, a buyer of Toshiba's NAND chips, reportedly threatened Western Digital with a boycott of its products if it took complete control of Toshiba's memory business"
So you inform the competition commissions and then do it anyway.
Seriously, who the hell wants to do business with people like that?
(Score: 3, Interesting) by TheRaven on Thursday September 14 2017, @07:31AM (1 child)
People who want to stay in business? Informing competition commissions is unlikely to do much, because monopolies are tightly regulated but monopsonies are not. Apple has had enough purchasing power to disrupt the flash market for a long time, but no one has cared. Back when the iPod shuffle launched, it was cheaper than most flash drives because Apple bought something like 60% of all flash chips produced and so could sell retail below what most of their competitors were paying wholesale.
It's generally bad for a business to depend on a single customer too much. I know a couple of startups that went bust because they allowed a single customer to grow to the majority of their business, and when that customer decided to be late with payments they weren't able to cover their running costs. The music industry learned that giving Apple complete control of online music distribution put Apple in too strong a bargaining position and only escaped by changing the rules. It's a difficult position to get out of though, because a supplier generally has very little control over what their downstream market looks like.
sudo mod me up
(Score: 3, Interesting) by ledow on Thursday September 14 2017, @08:11AM
"It's generally bad for a business to depend on a single customer too much."
Exactly. So staying in business means broadening your base and not allowing one customer to dictate your business.
It shouldn't have been allowed to get to that position while it was just Toshiba, it prevents them selling their own business for a start, If you're a buyer, you'll walk away like WD has done, or stand to lose that customer and adjust your purchase price according to the risk (i.e. down).
What you end up with is a company that you can only sell to your own customer, which can dictate its own pricing. "Here's a dollar, now I own you because no-one else will touch you if I walk away", in effect.
It is anti-competitive, and making the noise of that may well make them back away from that. It's the only option unless you just want to sell all your fabs below-cost to Apple. Sure, it'll hurt, but whatever way you look at it, Toshiba memory in Apple devices will be dead from then on anyway - either it'll be Apple-owned Toshiba memory, no Toshiba memory in Apple devices, or no Toshiba memory at all. Make a fuss in court and at least you stand to keep your other customers and maybe Apple will just pull out and go elsewhere instead so you can sell-off.
Fact is, getting in bed with Apple is never a good idea. I wouldn't be surprised if someone like Samsung tried to snap the company up now. I'm pretty sure Apple would like to lose to WD if the other option was losing to Samsung.
(Score: 2) by Virindi on Thursday September 14 2017, @07:57AM (3 children)
No kidding. Trying to dictate the entirety of another industry because of your purchasing power, based on being a big player somewhere else, is basically the definition of anticompetitive practice.
Nobody gives a crap anymore. Or maybe they never did.
I wish we could live in a world where the same rules apply to everyone, regardless of how many "jobs" you create in the right district or how much politicians love your products. Seems impossible from here at this point.
(Score: 4, Informative) by TheRaven on Thursday September 14 2017, @10:25AM (2 children)
No it isn't. It's an example of anticompetitive practice, but it's not the one that's most regulated. Most antitrust regulations are designed around excessive influence on the supply side, not the demand side. There are a lot of examples of excessive control on the demand side. For example, in the UK the supermarkets have driven the price of milk so low that farmers often make a loss selling it: their choice is either accept a below-cost offer or get nothing for a product that will have gone off in a couple of days. In the US, Walmart has been pushing their suppliers to accept razor-think margins and pushing several of them out of business for years.
Regulating the demand side is a lot harder, because that end of the supply chain ends with consumers. If consumers all decide that they prefer, for example, Android devices to iOS ones, and then shops refuse to sell iOS devices unless there's a big price cut, is this the shops exerting undue influence on Apple?
sudo mod me up
(Score: 2) by Virindi on Thursday September 14 2017, @10:46AM (1 child)
Okay, that was hyperbole. You got me :)
However, the examples you give are of a different nature. In this case, Apple is trying to manipulate the playing field in a different industry. That is a bit different than merely demanding suppliers give you a very low price.
(Score: 4, Interesting) by TheRaven on Thursday September 14 2017, @11:27AM
It's not very different. It's actually less bad in some respects: typically anticompetitive practice means that they're trying to get a monopoly. In this instance, Apple is trying to avoid anyone else getting a monopoly (or a sufficiently large share of the market that they can act as if they do). They're doing this because as long as the suppliers don't get too big, they retain a dominant bargaining position as the largest single customer for flash chips. If their suppliers consolidate, they'll be in a position to tell Apple to take it or leave it when it comes to price negotiations, because no one else will have the capacity to handle Apple's demand.
The ironic thing here is that Apple is actually pushing for more or less the same thing that antitrust regulators would normally push for. They want a healthy competitive market for flash suppliers. Only this time they want it because they buy so much flash that they can set the prices in a competitive market, whereas they couldn't in a monopoly. It's quite interesting to see a large company effectively arguing for better competition regulation (just not in their own markets).
sudo mod me up
(Score: 3, Funny) by Rivenaleem on Thursday September 14 2017, @10:54AM (3 children)
Toshiba tries to sell Memory business, but forgot where it put it.
(Score: 2) by bob_super on Thursday September 14 2017, @06:12PM
Toshiba's clearly got some wear leveling issues throughout.
(Score: 2) by FatPhil on Thursday September 14 2017, @10:03PM (1 child)
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by Rivenaleem on Thursday September 14 2017, @10:15PM
Wow, just gotta ram them puns in any way you can.
(Score: 0) by Anonymous Coward on Thursday September 14 2017, @04:19PM (1 child)
Chaos? A bit dramatical, I think.
(Score: 2) by takyon on Thursday September 14 2017, @04:28PM
When one of the companies that wants to buy you sues you to keep the process going, delaying the sale by a quarter or longer while your company continues to reel from a multi-billion-dollar nuclear writedown [bloomberg.com], and then that company gets threatened by Apple to not buy over a certain %, that's chaos.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 0) by Anonymous Coward on Thursday September 14 2017, @05:05PM
They will do the same things for which Romney was accused. Pump the company, and carve up the corpse, for maximum profit.
(Score: 2) by PocketSizeSUn on Thursday September 14 2017, @09:18PM
So buying up their competition makes sense for WD. However it will both:
- drive up prices.
- possibly crater WD
The problem being that memory fabs are expensive and if Samsung finds a way to make it cheaper and large enough volume, all of WDs vertical products could become either old/slow and over priced in the market.
It's actually in everyone's best interest, including WDs in the medium term, not have WD controlling too much ... do you really want Seagate as the only remaining drive manufacturer?