Updated 01/31/2024 – On 12/20/2023 Toshiba ends its 74-year history as a listed company. Toshiba’s new owner TBJH Inc., delisted the scandal ridden firm as part of the acquisition agreement (PDF). The deal structure is quite complex and involves a web of subsidiaries. Here’s an explanation from Bing:
- TBJH Inc. is an indirect subsidiary of Japan Industrial Partners Inc. (JIP).
- TBJH will be acquired by another JIP subsidiary, an investment fund called TB Investment Limited Partnership (TBLPS), through Brick Lane Partners.
- TBJH Inc. acquired all of Toshiba Corporation’s shares listed on the Tokyo and Nagoya Stock Exchanges.
- The shares of Toshiba Corporation were delisted on Dec. 20, 20232.
- The same amount of money as tender offer price $15 Billion (4,620 JPY per share) is scheduled to be delivered in April.
This structure allowed TBJH to acquire the complete shareholding of Toshiba Corporation and take Toshiba private.
TBLPS is made up of four JIP funds, 17 Japanese businesses, and six Japanese financial institutions. The Related Fund is made up of JIP overseas cooperative funds and overseas funds including those from Japanese institutional investors.
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Updated 06/22/2017 – As predicted below, the NYT reports that the Japanese government formed a coalition including the U.S. venture capital firm Bain Capital to buy Toshiba’s microchip division. Estimates are the Toshiba deal is worth approx. $20 Billion.
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Toshiba is being driven to sell off its crown jewel, its microchip business, to stabilize the international giant. The New York Times reports that the stalwart of Japan’s postwar rise as a global industrial giant warned that it has doubts over whether it could stay in business. In a filing in Japan, Toshiba said it wrote off more than $6 billion connected to Westinghouse Electric’s troubled nuclear reactor projects in the United States, which had created “substantial uncertainty” over its ability to continue as a going concern.
The Toshiba microchip division is the number two global provider of NAND flash memory. NAND flash memory is a type of non-volatile storage technology that does not need power to keep data. Flash memory is electronic (solid-state) non-volatile computer storage medium that can be electrically erased and reprogrammed.
Toshiba originally invented flash memory in the early 1980s from EEPROM (electrically erasable programmable read-only memory). They introduced it to the market in 1984. Called flash memory, after the flash on a camera, the chips have become an essential building block of the modern electronics industry.
The two main types of flash memory are named after the NAND and NOR logic gates. The individual flash memory cells have internal characteristics similar to those of the corresponding gates.
Where EPROMs had to be completely erased before being rewritten, NAND-type flash memory may be written and read in blocks (or pages) that are generally smaller than the entire device. NOR-type flash allows a single machine word (byte) to be written—an erased location—read independently.
The NAND type operates primarily in memory cards, USB flash drives, some solid-state drives, and similar products for general storage and transfer of data. NAND or NOR flash memory is also often used to store configuration data in many digital products, a task previously made possible by EEPROM or battery-powered static RAM. One key disadvantage of flash memory is that it can only endure a relatively small number of write cycles in a specific block.
Makers of flash memory chips
Samsung Electronics Co. (005930) is the biggest maker of flash memory chips, followed by Toshiba, SK Hynix, and U.S.-based Micron Technology (MU). Toshiba manufactures its NAND Flash Memories at its Yokkaichi Operations to maintain quality.
A sale of Toshiba’s chip business, while offering the business a lifeline, would take away its most successful business — and, more broadly, would represent a shift of a major technology away from Japan, depending on the buyer. The Toshiba sale is still in its early stages, and the NYT says as many as 12 companies have approached Toshiba with proposals. Reports are that Toshiba is asking bidders to value its operations at about $17.6 billion (2 trillion yen), and make at least a 50 percent investment.
One of the better-known suitors is Hon Hai Precision Industry, also known as Foxconn. Foxconn is the assembler of Apple (AAPL) iPhones and is the world’s largest contract electronics maker. Foxconn is based in Taiwan but performs most of its manufacturing in mainland China. According to the article, Foxconn could pay billions to buy the business.
Sources told Japanese public broadcaster NHK the first round of the Toshiba auction drew 10 offers. Toshiba has narrowed the field of bidders for its chip unit to four: U.S. chipmaker Broadcom (AVGO), a private equity firm Silver Lake Partners which reportedly offered $18 billion; SK Hynix; Western Digital (WDC); and Foxconn (2354), reports say Foxconn offered $27 billion.
Apple is considering teaming up with its supplier Foxconn to bid for the Toshiba semiconductor business, Japan’s NHK reported. Apple is considering investing at least several billion dollars to take a stake of more than 20 percent as part of a plan that would have Toshiba keep a partial holding so the business remains under U.S. and Japanese control, NHK reported.
Japanese government may save Toshiba
The authors point out Toshiba’s situation is a remarkable turnabout for Japan, a country that once controlled the majority of microchip markets. In the past Japanese companies have banded together to rescue flailing domestic rivals and not let them fold or be acquired by foreigners.
The article speculates that the Japanese government may cobble together a “team Japan” offer, but the response from potential participants — who would have to explain the spending to shareholders — has been tepid. “It is fundamentally unthinkable that the Industry Ministry would intervene and take some kind of action,” Hiroshige Seko, the industry minister, said at a news conference, further dampening expectations.
Mark Newman, an analyst at Sanford C. Bernstein, argued in a report that Toshiba’s memory business remained valuable enough that selling it amounted to “selling the crown jewels to pay next month’s rent.”
Japanese politicians and industry leaders have voiced concerns over Chinese investors’ buying advanced chip production technology; semiconductors and memory are a major priority of China’s industrial policy. That could hinder any deal with Foxconn, said Mr. Newman, of Sanford C. Bernstein.
The worry is that Foxconn “would build huge fabs in China,” Mr. Bernstein said, referring to semiconductor fabrication plants. “The jobs would move to China from Japan, and furthermore China would go after market share at the expense of crushing industry economics, so the U.S., Taiwan, Korea, Japan all get hurt substantially by this arrangement.” Foxconn has been successful in attracting subsidies from the Chinese government to build large-scale production facilities in China.
The article speculates that Foxconn could take the Toshiba technology and manufacture it more cheaply in China. Such a move could drive down pricing for memory, a boon for Apple and low-cost Chinese smartphone makers. But it would also propel China forward in its long push to become internationally competitive in semiconductors. Mr. Newman has warned that competition in NAND chips could heat up next year, creating the possibility of oversupply and putting more pressure on Toshiba’s ability to put in effect next-generation technologies.
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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.
The tortuous auction of the covted Toshiba NAND chip fab has finally wrapped. You would think that after over nine months of bidding and 2 trillion yen ($17.7 billion) the victors would like to gloat. A win of that size would be celebrated, but nooo….
One wrinkle may be that Apple (AAPL) has demanded new terms on its chip supply for the new iPhones. In addition to Apple, Bain’s consortium “Pangea” includes Japan’s Hoya Corporation, South Korea’s SK Hynix, and U.S. investors Kingston Technology, Seagate Technology (STX), and Dell Technologies Capital.- all of which want access to NAND technology.
Western Digital, one of the world’s leading makers of hard disk drives, paid some $16 billion last year to acquire SanDisk, Toshiba’s chip joint venture partner since 2000. It sees chips as a key pillar of growth and is desperate to keep the business out of the hands of rival chipmakers.
