Toshiba to bust memory chip sell-off deadline as Chinese antitrust authorities' third investigation drags on

Toshiba deal with Bain Capital continues to be held-up by regulatory hurdles

Toshiba is likely to miss its 1 May deadline to complete the sale of its memory chip business to a consortium led by Bain Capital - and both companies could be persuaded to call the deal off.

According to Bloomberg, Toshiba is considering other routes that could generate the funds it needs, such as an initial public offering (IPO) for the unit, which wouldn't attract antitrust scrutiny from authorities around the world.

Furthermore, given the boom in memory-chip prices over the past year, the unit would likely fetch even more if the deal were pulled and alternatives - like the IPO option - considered instead.

Regulators in China are now on their third review of the deal and won't be reporting before 28 May, according to Bloomberg.

Waiting for approval from Chinese authorities is all that's left to do. Not getting the approval would qualify as a material change

Toshiba and Bain Capital are said to be keen on finalising the agreement, but the sources believe that there is a degree of frustration surrounding the continued talks, with neither willing to hold-on indefinitely.

Toshiba, meanwhile, raised funding earlier this year, reducing its need to offload its most profitable element to make good a funding gap caused by the Chapter 11 bankruptcy of its US Westinghouse nuclear power unit.

The Bain-led consortium, which consists of backing from a range of Japanese and foreign companies, pledged to buy the business for an estimated $18.6 billion last September, with Toshiba maintaining a large minority stake.

However, it has been suggested that the delays could work in Toshiba's favour, either by it extracting a higher price from the Bain-led consortium, finding an alternative buyer prepared to pay a higher price, or filing for an IPO for the unit.

Currently, pundits estimate that the division is worth around $22 billion to $24 billion - significantly more than the $18.6 billion price agreed on last year.

Amir Anvarzadeh, a senior strategist at Asymmetric Advisors in Singapore, is one of many pundits who believe that the company should consider its options.

"This should be a short-term positive for its shares," wrote the analyst in a note recently.

At the start of the month, Toshiba CEO Nobuaki Kurumatani said that the company is determined to sell its chip business and will continue to work with regulatory bodies.

He said: "Waiting for approval from Chinese authorities is all that's left to do. Not getting the approval would qualify as a material change."

Despite the reports, a spokeswoman for Toshiba said the firm has not decided to scrap the cancellation. Bain has not commented on the situation.