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September 22, 2018

SK hynix relieved as Toshiba deal nears conclusion

PUBLISHED : May 18, 2018 - 15:48

UPDATED : May 18, 2018 - 16:56

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[THE INVESTOR] Korean chipmaker SK hynix welcomed the recent regulatory approval from Chinese antitrust authorities for the acquisition of Japanese chipmaker Toshiba’s memory chip business unit, confirming the deal will likely be concluded next month.

The chip-making arm of SK Group is part of a consortium led by US investment firm Bain Capital. The group, which was chosen as preferred bidder for the acquisition last year, was waiting for approval from regulators in eight nations, including the US, China, Korea and Japan. With the latest antitrust approval, the regulatory hurdles have been cleared. The group is scheduled to meet with Toshiba’s top executives to ink the deal on June 1.




Related:

Renegotiating Toshiba deal not an option: SK Group chairman


“We welcome the decision,” an SK hynix spokesperson told The Investor. “The acquisition will not immediately lead to partnerships for joint R&D projects, but it will help build amicable business relations with the Japanese firm.”

The Chinese approval came a little later than expected as the deal was initially anticipated to close in March, the fiscal year-end for the Japanese company.

Of the total 2 trillion yen (US$18.04 billion) the consortium will pay for the takeover, the Korean firm will chip in 395 billion yen in the form of convertible bonds, which will be equivalent to a 15 percent stake when exchanged with common stocks.

Among other participants are US tech giants Apple, Seagate and Dell, all of which will get preferred stocks.

The Bain-led group will hold a combined 49.9 percent stake in the Toshiba memory unit while 40.2 percent and 9.9 percent will be owned by Tohiba and Japanese optical product firm Hoya, respectively.

The Japanese tech firm put up its memory unit for sale to make up for financial losses caused by its now-bankrupt US nuclear power company Westinghouse Electric.

Some market watchers as well as memory chipmakers had expressed concerns over the impact of the deal between Toshiba and the Bain-led group on the global chip industry. They claimed SK hynix, which is ranked fourth in the NAND memory chip sector, could piggyback on Toshiba’s unit to increase presence in the segment. Toshiba is No. 2 in the NAND flash memory market after Samsung Electronics.

By Kim Young-won (wone0102@heraldcorp.com)

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