Western Digital to raise Toshiba chip offer

Western Digital plans to raise its offer for Toshiba’s prized semiconductor unit to $18 billion or more, a person familiar with the matter said, in a last-ditch effort to clinch a deal both companies consider vital.

The US chipmaker is part of a consortium led by a Japanese government-backed fund. The group will present the new offer of 2 trillion yen or more by Thursday, when the struggling Japanese conglomerate is due to choose a preferred bidder for its Toshiba Memory unit, the world’s second-largest producer of NAND memory chips, the person told Reuters on Saturday.

Toshiba has been favouring a rival bid from US chipmaker Broadcom, which has partnered with US private equity firm Silver Lake to offer 2.2 trillion yen, people familiar with the matter have told Reuters.

A spokesman for Western Digital had no comment. Toshiba could not immediately be reached for comment.

Toshiba had set a 2 trillion yen threshold for the sale as it rushes to find a buyer to cover billions of dollars in cost overruns at its now-bankrupt US nuclear business Westinghouse Electric.

The offer by Western Digital, a long-time partner of the laptops-to-nuclear conglomerate’s lucrative chips division, comes as uncertainty about the make-up of the groups bidding for Toshiba’s crown jewel has increased.

Western Digital has been seen by some sources as crucial to successful deal, as it jointly operates a key flash-memory chip plant with Toshiba in western Japan.

But the two companies have been at loggerheads over the auction. Western Digital is pursuing an international arbitration claim that Toshiba has breached joint-venture contracts by entertaining outside bids.