Korea-U.S.-Japan alliance offers 2.5 Tril. won for Toshiba chip business

The consortium consisted of Korean, American and Japanese companies has offered around 2.5 trillion Korean won to acquire Toshiba's semiconductor business. It was known that the final acquirer will be decided at a meeting of the Board of Directors on Wednesday.

The Korea-U.S.-Japan alliance has offered their final proposal that states that they are willing to offer Toshiba two trillion yen (or around 20.9 trillion won) of acquisition costs, along with an additional R&D cost of 400 billion yen (or around 4.1 trillion won), said the Japanese daily Sankei Shimbun. The total fund will be financed with shares and preferred stocks without voting rights, with 567.5 billion yen from Bain Capital and SK Hynix, 250 billion yen from Toshiba, 335 billion yen from Apple, 220 billion yen from an anonymous U.S. IT corporation, 27.5 billion yen from Japanese companies including Toshiba, and 600 billion yen from a bank.

According to the plan, the voting stocks of Toshiba Memory – a semiconductors subsidiary of Toshiba - will be shared by Bain Capital (49.9 percent), Toshiba (40 percent) and Japanese companies (10.1 percent). It is presumed that SK Hynix has given up the demands for their share. The plan was likely to be designed to receive approval from the Japanese government by easing concerns on management intervention from overseas or technology leakages by setting the share rate at 50.1 percent for Japan.

While SK Hynix gave up their share rights to overcome the highest barrier in the negotiations, the Korean semiconductors manufacturer cannot be rest assured whether the tripartite group will be selected as the final acquirer. The tender with the most possibility of winning the bid is the “new U.S.-Japan” alliance, which includes Toshiba’s long-term business partner Western Digital. The new alliance holds competitive edge, as it can propose ending a long-dragged lawsuit with Toshiba. While the tripartite group invited Apple, which purchases around 30 percent of its semiconductors from Toshiba Semiconductors, it is also receiving love calls from another tender, Foxconn Consortium. Therefore, the tripartite cannot lower their guards.

The local media expects the final acquirer to be selected at the Board Meeting at Toshiba on Wednesday. When decided, the deal is likely to be closed on Thursday or Friday.

Sung-Gyu Kim sunggyu@donga.com