Bain, KKR, Broadcom among suitors lining up for Toshiba's chips business

Bain, KKR, Broadcom among suitors lining up for Toshiba's chips business

People familiar with the matter told Reuters earlier on Friday SK Hynix will be part of a consortium led by US buyout firm Bain Capital LP, which seeks to buy a majority stake in the Toshiba chip business, offering around 1.5 trillion yen ($13.49 billion).

KKR is expected one of the most favoured bidders.

A Japanese state-backed fund plans to sell almost a fifth of shares in chip maker Renesas Electronics Corp - worth $2.7 billion at current prices - bolstering its coffers amid expectations it is planning to invest in Toshiba's chip unit.

Bain Capital is expected to sound out the government-backed fund Innovation Network Corp. of Japan about joining as a small shareholder. South Korean chipmaker SK Hynix would contribute money to the special-purpose company but avoid direct involvement to keep from running afoul of antitrust law.

Sources familiar with the matter said that INCJ and the Development Bank of Japan had separately told Toshiba of their intention to take part in the bidding process although there were no details on what form that participation may take. A spokeswoman for KKR and a spokesman for Broadcom also declined to comment.

Bain plans to bid around 1.5 trillion yen for a majority stake, two of the sources said, declining to be identified as talks were confidential.

South Korea's SK Hynix Inc., the world's second largest memory chipmaker, has raised its appeal in its final bid for the world's second largest flash memory business from Toshiba joining up with USA investment firm Bain Capital with influences in the Japanese corporate and government sector and promising to keep management under the Japanese company after buyout. A representative for DBJ was not immediately available to comment.

Through a regulatory filing, the company said it has made a decision to join the final bidding with its consortium partner. Their consortium was the highest bidder in the first round of the auction with an offer of 2.5 trillion yen, a person briefed on the matter said at the time.

Toshiba has valued its chip unit at at least 2 trillion yen ($18 billion) and is depending on the sale to help plug to cover billions in dollars in cost overruns at its now bankrupt US nuclear unit Westinghouse.