By Lee Min-hyung
SK hynix may lose its acquisition bid for Toshiba’s semiconductor business as a consortium led by U.S. competitor Western Digital is set to ink a deal this month, according to sources, Monday.
This is in contrast to the recent decision by Toshiba’s board of directors. This June, a Korea-U.S.-Japan consortium, including SK hynix, was selected as the preferred bidder for Toshiba’s memory chip unit.
But an ongoing legal battle between Toshiba and Western Digital has placed a big burden on the debt-ridden Toshiba, causing the company to reverse a previous decision, according to multiple overseas reports.
In June, Western Digital filed a lawsuit in the United States and Japan to block Toshiba from selling the chip unit to any third-party consortiums, citing the joint venture partnership between the two companies.
“Toshiba has been in a growing dilemma over the legal dispute at a critical time. The company desperately needs new capital to make up for the snowballing losses from its botched nuclear power plant project in the U.S.,” a semiconductor industry source said.
“The Japanese firm has been in a hurry to make up for the losses by selling off the profitable chip unit as soon as possible, but the lawsuit put the brakes on its plan to sell it to the SK hynix consortium.”
If the reports turn out to be true, the Western Digital consortium is expected to sign the contract after winning approval from Toshiba’s board meeting slated for the end of this month. The U.S.-Japan consortium includes Kohlberg Kravis Roberts (KKR), the Innovation Network Corporation of Japan (INCJ) and the Development Bank of Japan (DBJ).
Lingering negative public sentiment in Japan has also reportedly played a role in preventing the SK hynix consortium from winning the contract.
“Negative sentiment has swept across Japan, urging Toshiba not to sell the chip business to the Korean company amid concerns for possible technology outflow,” said the source who asked not to be named.
SK hynix declined to comment on the details of the reports.
A company official said: “We have yet to receive any updates from Toshiba since our consortium was selected as the preferred bidder for the deal.” He said as of now, nothing has been confirmed over the acquisition process.
Even if SK hynix fails to win the bid, Daishin Securities said it would not pose a huge threat to SK hynix’s market status.
“Expectations are that the prices of DRAM chips will further rise in the fourth quarter to drive up share values of hynix,” the brokerage said in a report.
“The potentially failed acquisition will not affect the firm’s share prices at the moment.”
SK hynix shares closed 67,900 won, down 500 won or 0.73 percent from the previous trading day.