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(Image courtesy of Toshiba).

Toshiba Completes Sale of Memory Chip Business, and Then Buys 40 Percent Back

Toshiba closed the sale of its semiconductor unit to an investor group led by American investment firm Bain Capital, and followed through on plans to reinvest $3.1 billion in the business. That gives the company 40.2 percent of the voting power over the world’s second largest manufacturer of NAND flash memory as the market for the technology continues to swell.

The investment allows Toshiba to exert some control over its former microchip division, which sold for almost $17.8 billion only after months of warring bids and legal battles with its manufacturing partner Western Digital, another claimant to the highly coveted business. The process was marred by constant confusion and reversals, but the proceeds give Toshiba an important financial lifeline to survive massive losses in its nuclear power unit.

The investors that banded together with Bain Capital include SK Hynix and Japan’s Hoya as well as Seagate Technology, Kingston Technology, Apple, and Dell Technologies. The companies have taken stakes in a holding company for the memory chip business, called Pangea. The composition of the Bain-led group gave pause to Chinese regulators, which delayed the deal before finally giving it the green light last month.

Toshiba said that it would generate 970 billion yen, or around $8.85 million, from the divestiture. And the company could continue to reap dividends from its business stake as orders surge for flash memory chips that save data in servers and smartphones. There have been widespread NAND shortages over the last year, padding prices as well as manufacturers' profit margins, though industry analysts say the recent market rally is winding down.

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