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Western Digital has apparently been spurned as Toshiba has agreed to sell its semiconductor business to Bain Capital instead for around $18 billion. The deal has not been finalized so more confusion could be over the horizon:
Japan's Toshiba Corp agreed on Wednesday to sell its prized semiconductor business to a group led by U.S. private equity firm Bain Capital LP, a key step in keeping the struggling Japanese conglomerate listed on the Tokyo exchange. In a last-minute twist to a long and highly contentious auction, Toshiba said in a late-night announcement through the exchange it agreed to sign a contract for the deal worth about 2 trillion yen (13.22 billion pounds).
The decision to sell the world's No. 2 producer of NAND memory chips, first reported by Reuters, was made at a board meeting earlier on Wednesday. Late on Tuesday, sources had said Toshiba was leaning towards selling the business to its U.S. joint venture partner Western Digital Corp. It's unclear whether the sale to the Bain Capital-led group will proceed smoothly, as Western Digital has previously initiated legal action against Toshiba, arguing that no deal can be done without its consent due to its position as Toshiba's joint venture chip partner.
Also at NYT, Engadget, Nasdaq, BBC, and Bloomberg (alt opinion).
Previously: Chaos as Toshiba Tries to Sell Memory Business
(Score: 3, Interesting) by bootsy on Friday September 22 2017, @02:38PM
Banks can make money out of this type of deal in a number of ways which due to the way banks are split up by so called "Chinese Walls" means that what is good for one part of the bank may not be necessarily good for another.
Banks make a ton of money out of mergers and acquisitions in an advisory capacity. They also get to brag about where there are on the M&A rankings.
Banks make money by making commision out of selling securities related to the deal be it shares, bonds, loans etc.
Banks make money from the interest on loans. If the rate is high enough you don't actually ever need the money paid back and in the short term you make money as you get the interest and principal. It's only when the default comes later that you claim to be surprised and enter a write-down but even then you can still have made a profit on the deal if the total you have received is greater than the loan plus funding costs for the duration of the loan.
There may well be a lot of chronyism going and you as an individual may know the firm's staff or want your children to have a job with them.
You may sell the loan/bond/equity off before the default occurs so in which case you have made a profit.
You may sell a derivative on the load/bond/equity before the default occurs.
You may buy a hedge derivative on the load/bond/equity before the default occurs and therefore make a profit on your "short" position.
What is most frustrating about all of this is that when the system works it can take a small business and really help it grow into something bigger that helps the whole economy without any of the tricks above but these days there seems to be a lot less of this and a lot more of the type of deal in the article.