Reluctant China Finally Approves Sell-Off of Toshiba Memory

The Chinese government has finally approved the acquisition of Toshiba Memory Semiconductor by the Korea-US-Japan Alliance that includes SK Hynix.

SK's acquisition of Toshiba Memory entered its endgame with the approval from China. Beijing had delayed its antitrust review of the deal which was essential to closing the deal in conjunction with China’s national focus on the semiconductor industry.

NHK in Japan reported on May 17 that Chinese authorities approved the deal after conducting their antitrust review of the acquisition of the Toshiba memory business by the Korea-US-Japan Alliance. A representative of this deal also confirmed that the report was correct. China's approval of the deal after the antitrust review last month came only eight months after Toshiba agreed to sell its semiconductor business to the Korea-US-Japan Alliance led by US-based Bain Capital for 2 trillion yen in September of last year.

The acquisition process underwent a series of turns such as the change of the first preferred bidder selected in the beginning of the sell-off which returned the process to the starting line again. China, unlike the US, the EU, the Philippines, and Taiwan, which approved the deal after antitrust reviews, did not approve the deal while procrastinating. It is analyzed that China believed that the deal will be a threat to China fostering its semiconductor business.

In the meantime, a voice was raised among Toshiba shareholders. They demanded that Toshiba cancel the plan to sell off its memory business unit. As Toshiba’s financial structure improved and the voice against the sell-off plan strengthened, it was even forecast that the plan itself might be scratched off.

SK Hynix is entitled to secure a stake of up to 15% by investing about 4 trillion won (US$3,6 billion).