Toshiba has completed the sale of Toshiba Memory Corporation to a consortium led by private equity firm Bain in a $18 billion deal that as late as last month looked like it might not go ahead.
However, the surprise approval of anti-trust authorities in China in mid-May removed the last potential hurdle to the deal.
The sale of the unit by Toshiba was intended to plug a gaping financial hole caused by the collapse of its US-based nuclear business Westinghouse in March 2017. That forced Westinghouse into Chapter 11 bankruptcy protection, with Toshiba on the hook for more than $5 billion. Westinghouse has since been sold to Toronto, Canada-based Brookfield Business Partners.
Although Toshiba was able to raise sufficient capital to meet its Westinghouse-related obligations midway through the sale process, it 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. Furthermore, with other Japanese companies also in the Bain consortium Toshiba Memory Corp will remain nominally Japanese owned - a requirement for getting 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 by 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.
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