By Kang Seung-woo
SK hynix has teamed up with a U.S. private equity firm to increase its odds of winning Toshiba's flash memory unit, according to sources, Wednesday.
The Seoul-based chipmaker has formed a consortium with Bain Capital and they jointly attended Toshiba's presentation held in Japan last week.
The Boston-based investment firm had been regarded as a potential bidder when Toshiba announced its intention to sell its NAND business in February.
"Bain Capital's active investments in Japan seem to have been highly valued," a source familiar with the issue said. He expected the presence of Bain will help SK attract additional Japanese financial investors. Bain has invested in Japan's largest family restaurant Skylark, Domino's Pizza Japan and Japan Wind Development.
As Toshiba has scaled up the selling of the profitable NAND unit -- from a 20 percent stake to a majority one worth as much as 3 trillion yen ($27.6 billion), there has been speculation SK hynix may need to raise external funds. Bain has more than $75 billion in assets under management.
U.S. chipmaker Broadcom has also joined forces with private equity firm Silver Lake Partners to take over the memory operations of Toshiba, the world's second-largest maker of NAND flash memory chips.
Last week, SK Group Chairman Chey Tae-won expressed his strong willingness to purchase the Japanese firm's most valuable asset, hinting he may hike his bidding price.
"As current Toshiba bids are non-binding and offers could change, the prices hold no significance at this point," Chey told reporters after a lecture on the Seoul campus of the Korea Advanced Institute of Science and Technology (KAIST) last week.
"When the main binding bidding kicks off, our bidding price will be different."
In the fourth quarter of last year, SK hynix was the world's fifth-largest NAND supplier, but a successful Toshiba deal will make it the No. 2 player in the sector behind Samsung Electronics.
However, it remains to be seen if SK's efforts will pay off due to the Japanese government's reluctance to see Toshiba's cutting-edge technology falling into the hands of a foreign company.
"To acquire the Toshiba unit, SK needs to add other investors to its consortium with Bain. But money does not guarantee SK hynix's success. SK is required to persuade the Japanese government and Toshiba," an industry official said.
The preferred bidder will be selected around June.
SK hynix declined to confirm whether the company actually established the consortium with Bain Capital.
NAND flash memory chips are used for long-term data storage in smartphones and other mobile devices, while DRAMs are mainly used for data or program code in personal computers.
SK hynix has teamed up with a U.S. private equity firm to increase its odds of winning Toshiba's flash memory unit, according to sources, Wednesday.
The Seoul-based chipmaker has formed a consortium with Bain Capital and they jointly attended Toshiba's presentation held in Japan last week.
The Boston-based investment firm had been regarded as a potential bidder when Toshiba announced its intention to sell its NAND business in February.
"Bain Capital's active investments in Japan seem to have been highly valued," a source familiar with the issue said. He expected the presence of Bain will help SK attract additional Japanese financial investors. Bain has invested in Japan's largest family restaurant Skylark, Domino's Pizza Japan and Japan Wind Development.
As Toshiba has scaled up the selling of the profitable NAND unit -- from a 20 percent stake to a majority one worth as much as 3 trillion yen ($27.6 billion), there has been speculation SK hynix may need to raise external funds. Bain has more than $75 billion in assets under management.
U.S. chipmaker Broadcom has also joined forces with private equity firm Silver Lake Partners to take over the memory operations of Toshiba, the world's second-largest maker of NAND flash memory chips.
Last week, SK Group Chairman Chey Tae-won expressed his strong willingness to purchase the Japanese firm's most valuable asset, hinting he may hike his bidding price.
"As current Toshiba bids are non-binding and offers could change, the prices hold no significance at this point," Chey told reporters after a lecture on the Seoul campus of the Korea Advanced Institute of Science and Technology (KAIST) last week.
"When the main binding bidding kicks off, our bidding price will be different."
In the fourth quarter of last year, SK hynix was the world's fifth-largest NAND supplier, but a successful Toshiba deal will make it the No. 2 player in the sector behind Samsung Electronics.
However, it remains to be seen if SK's efforts will pay off due to the Japanese government's reluctance to see Toshiba's cutting-edge technology falling into the hands of a foreign company.
"To acquire the Toshiba unit, SK needs to add other investors to its consortium with Bain. But money does not guarantee SK hynix's success. SK is required to persuade the Japanese government and Toshiba," an industry official said.
The preferred bidder will be selected around June.
SK hynix declined to confirm whether the company actually established the consortium with Bain Capital.
NAND flash memory chips are used for long-term data storage in smartphones and other mobile devices, while DRAMs are mainly used for data or program code in personal computers.
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