Toshiba Corporation, the struggling Japanese conglomerate, will once again try to sell its immensely valuable microchip business to a group of American and Japanese buyers.

Toshiba said on Wednesday that it had agreed to negotiate with a group led by Bain Capital, the American investment firm, that also includes two organizations controlled by the Japanese government. They will seek to strike a deal over Toshiba’s chip business, the world’s second-largest manufacturer of flash memory chips, which are used to store data in millions of smartphones and other digital devices.

A deal, which Toshiba hopes to complete by this month, is widely expected to value the chip business at more than $20 billion — a potential shot in the arm for a company struggling with the aftermath of a disastrous bet on building nuclear power plants.

But Toshiba said the negotiations would not be exclusive. That could leave an opening for new bids from Western Digital, another potential American suitor, and Foxconn, an electronics manufacturer based in Taiwan that has extensive operations in mainland China.

Toshiba is racing to shore up its finances. Once a symbol of Japan’s technical prowess and postwar rise, Toshiba said this year that it would have trouble staying in business because of losses from Westinghouse Electric, its nuclear power business in the United States, which was slammed with cost overruns and filed for bankruptcy court protection in March.

Toshiba’s banks are keeping the company afloat, but if it does not secure a significant infusion of new capital by March, it could be expelled from the Tokyo Stock Exchange. That would essentially cut it off from a broad swath of public investors.

The chip negotiations have been complicated, however.

Western Digital shares ownership with Toshiba of a flash memory production operation in Japan and argues that the Japanese company cannot sell the chip business to an outside party without its approval. Western Digital immediately objected to Toshiba’s decision on Wednesday to name the Bain group its favored bidder.

“We are disappointed that Toshiba would take this action,” Western Digital said in a statement. “Our goal has been — and remains — to reach a mutually beneficial outcome that satisfies the needs of Toshiba and its stakeholders.”

Toshiba had already picked the Bain-led group once before, in June. But the choice provoked a furious response from Western Digital. Legal pressure from the American company prompted Toshiba to back away from its previous commitment to Bain and reopen talks with other potential bidders.

Foxconn, which makes iPhone and other devices and hardware that carry the brand names of other electronics heavyweights, has publicly pushed to be the buyer. But its heavy manufacturing footprint in mainland China has promoted fears in Japan that the business could eventually leave the country and end up on Chinese soil.

Toshiba’s microchip unit is second only to Samsung Electronics of South Korea in producing so-called NAND flash memory chips. The business has been profitable for Toshiba, which pioneered NAND technology.

The winning bidder would have to show that it could nurture the microchip business while offering enough cash now to return Toshiba “to positive equity,” Yasuo Naruke, senior executive vice president at Toshiba, said in a statement.

Western Digital suggested it would continue to press Toshiba in the courts — the companies have filed dueling lawsuits — and at an arbitration tribunal operated by the International Chamber of Commerce, which is holding hearings on the sale at Western Digital’s request.

“We remain confident in our ability to protect our J.V. interests and consent rights,” Western Digital said, referring to the companies’ Japanese joint venture.

By: DocMemory
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