Toshiba enters exclusive chip sales talks with US-SKorea-Japan group

Toshiba said Wednesday it will hold exclusive talks with a consortium of US, South Korean and state-backed Japanese investors to sell its prized memory chip business, as the loss-hit conglomerate scrambles to raise cash.

The company, a pillar of corporate Japan, needs money to fix its battered balance sheet after taking massive losses from US nuclear operations that have puts its survival in doubt.

Its board Wednesday decided to select the consortium as a "preferred bidder" for the lucrative memory chip business, it said in a statement, suggesting the deal is all but imminent.

The group's joint bid, which is reportedly worth more than 2 trillion yen ($18 billion), is "the best proposal, not only in terms of valuation, but also in respect to certainty of closing, retention of employees, and maintenance of sensitive technology within Japan", Toshiba added.

Tokyo : The group is comprised of the public-private Innovation Network Corp. of Japan, the state-backed Development Bank of Japan, and US private equity fund Bain Capital, it said.

South Korean chip giant SK Hynix will participate as a lender in the deal, a Toshiba spokesman told AFP.

Toshiba is aiming to finalise a deal by its June 28 shareholders' meeting, and close any agreement by March next year, "upon clearance of all the required processes, including competition law approvals in key jurisdictions," it said.

But the sale of Toshiba's profitable memory chip business, seen as key for the cash-strapped firm's turnaround, still faces hurdles as its US chip factory partner Western Digital tries to block the sale with a court injunction.

Toshiba is the world's number two supplier of memory chips, behind South Korea's Samsung and ahead of third-placed Western Digital.

Its chip division has accounted for about one-quarter of its annual revenue.

The inclusion of Japanese investors in the buying group will help ease reported government concerns about losing a sensitive technology to foreign owners amid questions about security around systems already using Toshiba's memory chips. They are widely used in data centres as well as smartphones and computers.

Before the company confirmed the talks, the Japanese government's top spokesman Yoshihide Suga said Toshiba's semiconductor business was important in terms of "information security" and "from the viewpoint of maintaining jobs". 

In Tokyo trade, shares in Toshiba fell 1.18 percent to 326.3 yen following the announcement.