South Korea’s SK Hynix Inc., the world’s second largest memory chipmaker, has raised its appeal in its final bid for the world’s second largest flash memory business from Toshiba Corp. by joining up with U.S. investment firm Bain Capital with influences in the Japanese corporate and government sector and promising to keep management under the Japanese company after buyout.
SK Hynix confirmed that its board has approved entering a final bid for Toshiba’s NAND (non-volatile storage) chip business but declined to give details.
Shares of SK Hynix closed 2.69 percent down Friday at 54,200 won.
According to the Nihon Keizai Shimbun, a consortium led by Bain and SK Hynix has offered a management buyout deal where a special purpose company (SPC) would buy 51 percent or more in the memory division, leaving the rest with the company and Toshiba Holdings. The consortium reportedly has offered 1.5 trillion yen ($13.5 billion). SK Group chairman Chey Tae-won who flew to Tokyo to oversee the deal said the company would go bolder in the final bid. In the preliminary bid, SK Hynix reportedly offered around $9 billion for 50 percent plus management right, far below 3 trillion yen ($27.6 billion) proposed by Taiwan’s Hon Hai Precision also known as Foxconn Technology.
As it cannot match the Taiwanese group in price, SK Hynix has raised its chances by ensuring to keep management under the Japanese to win favor from the Tokyo government that opposes to the memory business falling in foreign hands. By making Bain take a leading role, the Korean chipmaker also could avoid antitrust concerns. SK Hynix is the world’s fifth largest NAND producer.
The Bain consortium has reportedly pitched the win-win feature should the second and fifth largest producer join forces and promised to list the Toshiba NAND company within the next two years.
A preferred bidder is expected to be announced in June.
By Hwang Hyung-gyu and Lee Dong-in
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