Executives at Toshiba have finally come to a decision on who will be the successful suitor for the firm's lucrative memory business. Toshiba has announced its choice of a government-led multinational consortium as the preferred buyer for its flash memory unit.
The group includes the government-backed fund Innovation Network Corporation of Japan, the Development Bank of Japan, and American private equity firm Bain Capital. South Korean chip maker SK Hynix is also expected to join the team by offering loans.
Toshiba officials say they aim to complete the deal in time for a shareholders' meeting on June 28th.
Industry Minister Hiroshige Seko was glad to hear the latest development.
"We welcome Toshiba's decision. We hear the firm is continuing negotiations to finalize the agreement. We also understand they are working on laying out a definite framework for the deal. We are keenly watching the process," he said.
Toshiba has been finding it hard to secure operating funds. But the company will likely get some extra support from its main lenders by the end of this month.
Sources say banks could offer up to $250 million.
The company's main lenders include Sumitomo Mitsui Banking Corporation and Mizuho Bank.
The new loans would be extended out of a credit line of about $2.5 billion.
Behind Toshiba's decision to sell the memory division are the big losses racked up by former US nuclear subsidiary Westinghouse.
When Toshiba started looking for buyers, about 10 companies joined the first round of bidding in March.
But none were Japanese firms.
Government officials worried the company's sensitive technology could end up being transferred overseas. They said they would screen any bids based on the Foreign Exchange and Trade Act.
By the deadline for the second round of bidding in May, 4 groups including US, South Korea and Taiwan firms took part. Still, no Japanese companies were among them.
Another sticking point for the sale has been Toshiba's US partner Western Digital. The 2 firms have been jointly operating a key factory in central Japan. Western Digital had set its sights on a majority stake in the memory unit, and it tried to prevent Toshiba from selling the business.
It has been a difficult road for executives at Toshiba. They've faced pressure from both the government to accept the joint Japan-US bid -- and Western Digital, with its objection to the sale itself.
NHK World's Gene Otani spoke with senior economic correspondent Reiko Sakurai in the studio.
Otani: What was behind Toshiba's decision?
Sakurai: The bottom line is that the group is led by a Japanese-government backed fund. Government officials had made it clear that they don't want international competitors acquiring the firm's sensitive technology. They also wanted a deal that would preserve as many domestic jobs as possible. These factors likely led Toshiba to turn down other bidders that had offered more money, such as US company Broadcom.
Otani: Toshiba has been struggling to resolve its differences with US business partner Western Digital, which has been opposing the sale of the chip business. Will this decision smooth things over?
Sakurai: Western Digital and Broadcom have been rivals, so Toshiba officials are certainly hoping that will be the case. But the problem could be far from over. Right after the announcement, Western Digital reiterated that it is opposed to Toshiba selling off its semiconductor business. Both the Japanese government and Toshiba had been urging the firm to join the multinational consortium.
Otani: What challenges now lie ahead?
Sakurai: Japanese government officials could face pressure to explain why they used government-backed money to save a private firm. It's also unclear whether Toshiba will be able to rebuild itself since they can no longer depend on their profitable chip unit. Executives have been focused on saving the firm. Now, they need to explain how they plan to succeed as a business.