Silver Lake and Broadcom bid $18bn for Tosh memory biz
US memory-buying partnership arrives out of the blue
We can add the pairing of Silver Lake and Broadcom to the ten bidders for part or whole stakes in Toshiba’s memory business.
Tosh wants to sell the business to raise cash to cover the enormous losses in its US nuclear power station building business, which resulted in its Westinghouse Electric subsidiary filing for Chapter 11 bankruptcy protection. The company values its spun-off memory business, which makes flash SSDs and allied products, at between $13.5bn and $18bn.
Silver Lake Partners, the private equity firm, has teamed up with chip supplier Broadcom and together they tendered a ¥2 trillion ($17.9bn) bid for the Toshiba Memory business on Friday, March 31, according to the Nikkei Asian Review.
The bid is at the high end of Toshiba’s own valuation of the memory business and the US domicile of the bidders is also a plus. Previously the Japanese government has said it is concerned about the memory business falling into unfriendly foreign ownership, reckoned to mean China and Taiwan.
The other known bidders are Western Digital, SK Hynix, and Foxconn. Silver Lake and Broadcom together make a fourth bidder. That leaves six more in the group - understood to be European and US investment funds, such as Bain Capital.
Sliver Lake helped bankroll Dell's acquisition of EMC last year, and Broadcom bought Brocade for $5.9bn last November.
The Nikkei report suggests potential synergies of Silver Lake having a Toshiba Memory business interest and its Dell holdings, with Dell getting a supply of NAND chips and or SSDs for its storage and servers. Broadcom could similarly get a supply of chips and SSDs for its telecommunications products business.
The idea of Dell becoming more vertically integrated by moving down the non-volatile memory product stack is intriguing, and could present problems down the road for HPE, Cisco and NetApp, which all buy in SSDs.
We think it is feasible that Western Digital could join Silver Lake and Broadcom, as it might see benefits regarding the supply of chips from its Toshiba foundry joint venture, and also SSDs to both Dell and Broadcom. ®