[Global Science and Technology Report] "Nihon Keizai Shimbun" reported on April 25th that the investment company Kohlberg Kravis Roberts (KKR) and Japanese officials are surrounded by Toshiba Semiconductor plans to sell the memory business. The joint venture fund industry innovation agency will join hands in the bidding process. As the "anti-monopoly law" is less restrictive and has a wealth of financial strength, the tenders and bids surrounding Toshiba's potential business are expected to advance with the two companies as the core. Existing bid companies are also exploring cooperation, and the cohesiveness of the Japan-US Fund Alliance is increasing. The second tender is expected to be in mid-May, and the intentions of the companies are still in a state of interlocking.
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"Japan-US alliance" surfaced
KKR, the world’s largest M&A fund, participated in the first tender, which ended in March. However, the amount proposed appears to be relatively low, and therefore has been exploring cooperation with other companies. On the other hand, the innovation agency did not participate in the first tender. On April 18th, the president of the innovation agency Chihjun Jun stated that “an internal team has been established and is studying it†to show a positive discussion on the bid.
By the end of 2016, KKR had managed about US$130 billion in total funds and was actively involved in mergers and acquisitions (M&A) in Japan. Japan’s government-civilian joint venture fund industry innovation agency wants to avoid selling Toshiba’s semiconductor business to companies in mainland China and Taiwan. Both coincided with the acquisition intention. In the future, through asset appraisal, the proportion of capital contribution and bid amount will be determined. In addition, Japan Policy Investment Bank also participated in the joint acquisition of the above two options.
Various buyers purchase intentions are intertwined
The first tender for the sale of the semiconductor business by Toshiba involved ten companies from the United States, South Korea and Taiwan, including peer companies, partners, and funds. In addition to Western Digital (WD), which is cooperating with Toshiba on production, Broadcom, South Korea's SK Hynix, and Taiwan's Hon Hai Precision Industry have been short-listed. Toshiba plans to advance individual negotiations before the second tender deadline in mid-May.
With the promotion of tender procedures, it is hoped that Toshiba, which sells at a high price as early as possible, will interweave with various strategies such as the Western Digital that refuses to be acquired by other companies in the industry and the Japanese government that is worried about the outflow of technology. In addition, antitrust reviews of countries that require a minimum of six months or so will also have an impact, and the uncertainty of sales procedures is increasing.
Start camp action is active
The key to opening up the situation is business cooperation. The trends of KKR and innovation institutions that have abundant funds and are less restrictive at the business level due to the fund are concerned. Toshiba had previously requested support from the Ministry of Economy, Trade and Industry of Japan, which administers innovation agencies. Toshiba-related sources said that "(Japan-US alliance) is the most likely option as of now."
In addition, Western Digital is exploring cooperation with KKR while SK Hynix is ​​exploring cooperation with innovative institutions. Although Western Digital has the intention, for innovation agencies, if there are industrial companies participating, it will be easy to establish the principle of providing technological innovation and assistance. Toshiba hopes to promote a number of companies to provide funds to increase the growth of the weak sales amount.
The other camps also tend to be active. Hon Hai is exploring cooperation with Softbank Group and Apple in the United States. The selection of buyers around Toshiba is not only the individual interest of individual companies, but also the intention of the governments of Japan and the United States. There are also voices that buyers outside the Japan-U.S. alliance are likely to make a comeback and that the sale process may face ups and downs.
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