SK Hynix set to invest in Toshiba chip unit, details consortium's plans

SEOUL (Reuters) – South Korea’s SK Hynix Inc said on Wednesday its board had approved its participation in a Bain Capital-led consortium that plans to purchase Toshiba Corp’s memory chip unit for 2 trillion yen ($ 17.7 billion).

SK Hynix said in a statement it will invest 395 billion yen, part of which will be in convertible bonds that could allow it to take an equity stake of up to 15 percent in the future.

Toshiba’s board agreed last week to sell the unit, the world’s second biggest producer of NAND chips, to the Bain group. However, the signing has been delayed because consortium member Apple Inc demanded new terms on chip supply in return for funding, sources familiar with the matter have said.

A Toshiba spokesman said the firm was aiming for a signed deal as soon as possible.

One person with knowledge of the deal, who declined to be identified due to the sensitivity of the matter, said that he did not expect the deal to be signed on Wednesday.

The Bain-led consortium will hold 49.9 percent of the voting rights in the chip unit, while Toshiba will hold 40.2 percent and Japan’s Hoya Corp, a medical technology firm that also makes parts for chip devices, will own 9.9 percent, the statement said.

Consortium members Apple, Dell Inc, Seagate Technology Plc and Kingston Technology, will invest in the form of non-convertible preferred shares, it said.

Pressure from the Japanese government, changing alliances among suitors and a slew of revised bids has drawn out the auction over nine months – heightening the risk that the deal may not close before the end of Japan’s financial year in March as regulatory reviews usually take at least six months.

If the deal does not close before then, Toshiba – hurt by liabilities at is now bankrupt nuclear unit Westinghouse – is likely to end a second consecutive year in negative net worth, putting pressure on the Tokyo Stock Exchange to strip it of its listing status.

The sale also faces legal challenges from Western Digital, Toshiba’s chip venture partner and rejected suitor, which is seeking an injunction to block any deal that does not have its consent.

Western Digital, one of world’s leading makers of hard disk drives, paid some $ 16 billion last year to acquire SanDisk, Toshiba’s chip joint venture partner since 2000. It sees chips as a key pillar of growth and is desperate to keep the business out of the hands of rival chipmakers.

Toshiba has said the sale would improve its shareholders’ equity by 740 billion yen ($ 6.6 billion).

Reporting by Joyce Lee and Hyunjoo Jin; Additional reporting by Makiko Yamazaki; Editing by Edwina Gibbs

Our Standards:The Thomson Reuters Trust Principles.

Tech

French aviator plans to fly from Paris to New York in a biofuel plane

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In the spirit of Charles Lindbergh, a French research company hopes to complete the first carbon-free trans-Atlantic flight later this year.

The Eraole, an electric biofuel plane developed by Laboratoire Océan Vital, will take flight from New York to Paris in June: The company says the plane will produce zero carbon emissions. If successful, the plane could have lasting impacts in the field of environmentally-friendly flight.

Laboratoire Océan Vital was founded by Raphaël Dinelli, a pilot and adventurer, who will pilot the plane on its transatlantic journey. Read more…

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HP’s struggles reflected in CIOs IT purchasing plans

HP’s plan to lay off 33,000 workers over the next three years — the latest step in its massive restructuring — underscores the challenges the tech giant faces as it seeks to adapt to changing demands in corporate computing.

CIOs, many of whom are under pressure to inject digital capabilities into their businesses and support increasingly mobile workforces, are shifting spending away from enterprise hardware and services to cloud, mobile and analytics software. Incumbent vendors are scrambling to keep up, each in different ways. However, HP’s answer to the challenges is the most dramatic and headline-grabbing.

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Line delays IPO plans until ‘earnings and market conditions improve’

Reuters / Toru Hanai

Seoul (By Joyce Lee, Reuters) — South Korea’s largest web portal operator Naver Corp won’t decide on when to IPO its messenger app service unit Line Corp until its earnings and market conditions improve, Naver’s CFO said on Friday.

Hwang’s comments were in answer to questions prompted by a Wall Street Journal report on Thursday that said that Japan-based Line had scrapped its plans for an initial public offering (IPO).

Documents for Line’s IPO continue to be under review by authorities in both the United States and Japan, CFO Hwang In-joon told Reuters, but said markets were currently too volatile to give a timetable for the listing.

From VentureBeat

“When choosing when to go to market, we need to consider whether we’ll take our second quarter performance results with us, or third quarter or fourth quarter results. Our results in the second quarter were not that great,” Hwang said.

Naver Corp reported weaker-than-expected second-quarter profit in July, weighed in part by lower revenues at Line Corp due to falling advertising sales.

Line, which operates the No.1 chat app in Japan, Taiwan and Thailand by number of users, reported second-quarter revenue of 27.8 billion yen, down from 28.1 billion yen the previous quarter, after at least three straight quarters of revenue growth.

Naver decided not to list the unit last year, on the belief that Line could command a better valuation by further building its revenue and profit.

(Reporting by Joyce Lee; Editing by Miral Fahmy and Muralikumar Anantharaman)

VB’s research team is studying web-personalization… Chime in here, and we’ll share the results.


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