Silver Lake And Broadcom Reportedly Offer $17.9 Bln For Toshiba's Chip Unit

(RTTNews) - Toshiba is set to begin the process of negotiating a sale of its memory chip operations that meets its financial needs while addressing government security concerns, Nikkei Asian Review reported.

Nikkei reported that U.S. private-equity firm Silver Lake Partners and American chipmaker Broadcom, part of the firm's portfolio, apparently tendered a roughly 2 trillion yen or $17.9 billion bid. That is on the high end of estimates of the memory business' value.

The report noted that around 10 bidders -- including peers such as U.S.-based Western Digital, a hard-drive maker that partners with Toshiba on memory, and South Korea's SK Hynix -- have stepped forward.

The report said that shareholders approved a spinoff of the business, to be called Toshiba Memory, at an extraordinary meeting Thursday. The Japanese conglomerate plans to sell a majority stake in the new entity to fill the hole in its finances left by nuclear unit Westinghouse Electric's bankruptcy filing.

The company hopes to pick a winning bid before the general shareholders meeting in late June, a senior executive reportedly said.

The report indicated that Toshiba expects its liabilities to exceed its assets by roughly 620 billion yen when the current fiscal year ends Friday. After taking taxes into consideration, Toshiba would need to earn 1 trillion yen from the sale to bring its net worth back into positive territory. Assuming the memory operations' net assets are worth 500 billion yen to 600 billion yen, the business would need to sell for around 1.5 trillion yen for Toshiba to net 1 trillion yen.