Western Digital Corp plans to raise its offer for Toshiba chip

FILE PHOTO: A Western Digital office building is shown in Irvine, California, U.S., January 24, 2017. REUTERS/Mike Blake/File Photo
Vastavam web: WDC planning to give offer to Toshiba Corporation semiconductor unit to $18 billion or more in a last-ditch effort to clinch a deal both companies consider vital.Toshiba has been favoring a rival bid from U.S.The U.S. chipmaker is part of a consortium led by a Japanese government-backed fund. chipmaker Broadcom Ltd (AVGO.O), which has partnered with U.S. private equity firm Silver Lake to offer 2.2 trillion yen, people familiar with the matter have told.
Toshiba had set a 2 trillion yen threshold for the sale as it rushes to find a buyer to cover billions of dollars in cost overruns at its now-bankrupt U.S. nuclear business Westinghouse Electric Corp.The offer by Western Digital, a long-time partner of the laptops-to-nuclear conglomerate’s lucrative chips division, comes as uncertainty about the make-up of the groups bidding for Toshiba’s crown jewel has increased.But the two companies have been at loggerheads over the auction. Western Digital is pursuing an international arbitration claim that Toshiba has breached joint-venture contracts by entertaining outside bids.
Toshiba is concerned an acquisition by Western Digital would run into antitrust objections from China and elsewhere as the U.S. firm is the world’s third-largest NAND producer behind South Korea’s Samsung Electronics Co (005930.KS) and Toshiba.To counter those concerns, the Western Digital portion of the consortium’s new offer will be in the form of a debt purchase whereas the U.S. firm had previously been looking for an equity stake in Toshiba Memory, the source said.Toshiba’s Tsunakawa asked if Western Digital “could further increase the price”, the source said, adding that the U.S. firm would modify its proposal, “to align with their thinking”.Western Digital’s new offer will also include a commitment to $25 billion dollars in capital spending for the joint venture’s Yokkaichi facility, including building two fabrication plants, the source said.