The Strategist

Toshiba Memory to buy back its shares


05/23/2019 - 10:27



Apple, Dell Technologies, Kingston Technology and Seagate are planning to sell their shares in Toshiba Memory chip maker, The Wall Street Journal (WSJ) reports, citing sources familiar with the situation.



Raimond Spekking
Raimond Spekking
In 2017, Toshiba Memory was bought by a consortium led by investment giant Bain for 2 trillion yen ($ 18 billion). However, Toshiba still has 40.2% of the shares, giving the right to vote. The share of Bain was 9.9%. Toshiba Memory was also acquired by SK Hynix, Dell, Kingston, Seagate and Apple, but these companies do not have the right to vote.

For a long time, Toshiba Memory has been fighting with Western Digital Corporation, which still has a joint venture for the production of memory with the Japanese company, inherited after the purchase of SanDisk. The sale of assets to an investment consortium led by Bain Capital was organized in such a way that the interests of both the WDC and Toshiba itself, which wanted to maintain operational control over memory production, were taken into account.

The sale of part of the unit for the memory chips production allowed the firm to solve pressing problems, and most importantly, the company's shares could remain on the Tokyo Stock Exchange's quotation list.

Now Toshiba Memory is trying to reduce the degree of dependence on foreign majority shareholders, and therefore this year it is preparing to buy 38% of preferred shares from a number of companies.

According to the WSJ, Toshiba will buy back shares from Apple, Dell, Kingston and Seagate for about $ 4.5 billion as part of a $ 11.8 billion financing plan offered by Japanese banks. The deal is planned to be closed until the end of May 2019.

Toshiba Memory sent the following response to the CRN publication request: “As for external or internal requests, we do not comment on the details (dates, etc.) of the IPO or refinancing. We can only report that we are preparing an IPO.”

Meanwhile, Western Digital, which claimed purchase of Toshiba Memory, confirmed plans to invest in a joint project with the company. It will be the K1 plant, which Toshiba Memory is currently building in Kitakami (Iwate Prefecture, Japan).

The K1 plant will produce 3D flash memory to meet the growing demand for storage solutions in industries such as data centers, smart phones and autonomous cars.

It is expected that construction of the K1 plant will be completed in the autumn of 2019. Joint capital investments of the companies in the plant equipment will allow production of a 96-layer three-dimensional flash memory to be launched in 2020.

source: wsj.com