Toshiba sells Toshiba Memory Corp to a consortium including Apple, Dell, and SK Hynix

A decision has finally been met where Toshiba will sell Toshiba Memory Corp (TMC) for 2 trillion Yen (US$17.81 billion) to a consortium which includes Bain Capital, Apple, Dell, and SK Hynix. The consortium has made a special purpose company (K.K. Pangea) to perform the acquisition and to maintain an IP separation due to conflicts of interest with competitor businesses such as SK Hynix. Toshiba will also invest 350.5 billion Yen (US$3.12 billion) in the new company and will be entitled to receive a share of any dividends paid.

Since early 2017 there has been a discussion about Toshiba selling off part or all of their high-performing flash memory division to rescue the company from the poor financial situation they had put themselves in through falsified accounting and expensive acquisition decisions. Early on in the year it was looking like Toshiba would only need a partial sale of the division to sustain operations, but as time progressed it became increasingly necessary to sell a larger chunk until it was finally decided to sell the entire flash memory subsidiary.

As mentioned, the deal has been arranged in a way to keep TMC technology separated from those in the consortium, and it will allow TMC management to continue to manage the company independently.

Many of the delays experienced are due to legal action from Western Digital (and their subsidiary, SanDisk), who has involvement in a joint partnership with Toshiba. Western Digital has worries about competitors getting access to IP jointly developed between Toshiba and Western Digital/SanDisk, and has shown interest in purchasing the company themselves at what is likely a lower rate than Toshiba will now receive.

Toshiba is a large international company — which can trace its roots back 142 years — with roughly 188,000 employees globally (2016), and their memory division that produces NAND flash products was one of their most recognizable, progressive, and growth-sustaining businesses. The business transfer is scheduled for completion by March 2018, and after the cash-flow injection, it remains to be seen what impact this will have on Toshiba’s operations and market presence going forward.

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