Toshiba finally completes $18bn sale of memory business to Bain-led consortium

Approval by China's antitrust regulators at the end of May paved way for completion of Toshiba memory chip business sale

Toshiba has finally completed the $18bn sale of Toshiba Memory Corporation to a consortium led by private equity firm Bain, with Apple taking a minority stake.

The sale of the unit was originally intended to plug a financial hole caused by the collapse of Toshiba's US-based nuclear business Westinghouse in March 2017, forcing it into Chapter 11 bankruptcy protection. Westinghouse has since been sold to Toronto, Canada-based Brookfield Business Partners.

Toshiba was able to raise sufficient capital to meet its Westinghouse-related obligations midway through the sale process, but has pushed ahead with the sale of its most profitable unit in an effort to put its core engineering and electronics businesses on a firmer financial footing.

That sale will also see the company retain a 40 per cent stake. With a number of other Japanese companies in the Bain consortium, Toshiba Memory Corp will remain nominally Japanese owned - a move that helped ensure the approval of authorities in Japan.

Attempts by Western Digital to acquire a controlling stake in the business were seen off following a protracted dispute that, at one stage, saw Western Digital staff locked out of factories in Japan in which both companies enjoy 50 per cent share stakes.

Western Digital's ties to Toshiba Memory Corp were acquired with its $19bn acquisition of SanDisk in 2016. SanDisk had partnered with Toshiba on the development of SSDs. Western Digital argued that the terms of the agreement between Toshiba and SanDisk gave mutual rights of approval to any sale.

However, the acquisition of Toshiba Memory by Western Digital would have had major implications for competition - part of the reason why Apple lined up with Bain - and it is open to question whether Western Digital could raise the capital to meet Toshiba's valuation so soon after its SanDisk acquisition.

The terms of the settlement between the two companies saw the joint venture prioritised in terms of investments, a commitment from Toshiba Memory to invest evenly in the joint venture, and the extension of Flash Alliance and Flash Forward agreements.

Opponents of the Toshiba Memory sale argue that the company could've raised most of the capital it needed by selling off share stakes in a number of other less-profitable businesses, such as Toshiba Plant Systems, Phison Electronics and Central Japan Railway.

Meanwhile, a subsidiary of Westinghouse's new owner Brookfield is said to have held talks to acquire parts of the collapsed Carillion business in the UK.