Consortium with Bain Capital
According to the semiconductor industry on May 19, SK Hynix took part in the second bid on the sale of Toshiba’s semiconductor business division in the morning of the day. The semiconductor company finished due diligence work recently after receiving a request to participate in the second tender from Toshiba.
"Since the bid deadline is noon on the day, SK Hynix handed in a bid in the morning," an industry official said. "SK Hynix participated in the bid with its consortium partner Bain Capital with upwards of 10 trillion won (US$9 billion)."
SK Hynix reportedly took part in the bid by forging alliance with US private equity firm Bain Capital. According to Japan’s Nihon Keizai Shimbun newspaper, Bain proposed the MBO method, a form of takeover in which Toshiba's management also participates. That is to say, Bain will take 51% or more equities and Toshiba Memory or the Toshiba management will have the rest. Bain establishes a special purpose company (SPC) to acquire a majority stake. SK Hynix of Korea will supply funds to this SPC. In this case, SK Hynix will be free from antitrust laws.
But Western Digital (WD) collaborating with Toshiba has demanded that Toshiba stop selling its equities, which is a variable. In this regard, Bain has expressed its intention to deliberate with WD about the alliance with SK Hynix.
Another variable is that the US investment fund Kohlberg Kravis Roberts (KKR) is loggerheads with Japan-US Alliance of Innovation Network Corporation of Japan. Accordingly, it is said that SK Hynix, Bain Capital, KKR, Innovation Network Corporation of Japan and WD are all able to form a grand union. This is logic that if multiple players take over Toshiba as a group, checks among them will be able to prevent Toshiba’s technology from being leaked to the outside. Analysts say that this will be the scenario most welcomed by the Japanese government.