The board of directors at struggling tech giant, Toshiba, have come up with their top pick for a buyer for the company's storage business, Toshiba Memory Corporation.
The consortium of buyers which got the tick of approval includes the Innovation Network Corporation of Japan, the Development Bank of Japan and Bain Capital.
While the sale of the subsidiary still requires final approval from shareholders, the company said the consortium presented 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”.
Backing for the bid by the two state-supported organisations could be key to getting the sale over the line as local company involvement is considered essential for winning government approval for an acquisition in Japan.
The company said it now hopes to reach an agreement with the consortium ahead of its next annual ordinary general meeting of shareholders on 28 June, so the deal can be put to a vote.
The company added that if the vote is successful, it hopes to close the transaction by March 2018.
The Toshiba Memory Corporation was split from its parent company on 1 April 2017, shortly before the company spun off other parts of the business into wholly-owned subsidiaries to boost the total value of the company.
“The company announced its intentions [to split off and regroup the entities] on respect of eliminating risk related to the overseas power business, which has been realised by the commencement of Chapter 11 proceedings that eliminate Westinginghouse from FY2016 consolidated earnings results,” Toshiba said in a statement at the time.
According to a Bloomberg report, Bain, INCJ and DBJ will contribute cash and equity as part of the deal but South Korean chip maker SK Hynix will join the group by providing only loans to avoid antitrust hurdles.
SK Hynix was not mentioned in the company’s statement to shareholders.
The sale process was triggered by disappointing financial results which raised doubts over its ability to continue, with its net income dipping to nearly US$5.59 billion in losses for the third quarter of financial year 2016.
The company's result was a decrease of about US$1.12 billion from the same corresponding period the year before.
The rumours of potential buyers for the chip maker have been flying thick and fast since Toshiba announced its intention to sell.
Western Digital, Foxconn Technology Group and Kingston Technology were among at least 10 potential bidders lining up for a chance to take on Toshiba’s memory chip business, according to reports.