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posted by martyb on Thursday September 14 2017, @06:42AM   Printer-friendly
from the chipped-away dept.

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


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  • (Score: 3, Interesting) by TheRaven on Thursday September 14 2017, @07:31AM (1 child)

    by TheRaven (270) on Thursday September 14 2017, @07:31AM (#567678) Journal

    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.

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  • (Score: 3, Interesting) by ledow on Thursday September 14 2017, @08:11AM

    by ledow (5567) on Thursday September 14 2017, @08:11AM (#567690) Homepage

    "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.