(MENAFN- AFP) Toshiba said Wednesday it would sell its memory chip business to a group led by US investor Bain Capital, in a deal worth around $18 billion and seen as crucial to keeping the Japanese conglomerate afloat.
The sale to the consortium -- which includes US tech giants Apple and Dell as well as South Korean chipmaker SK Hynix -- caps a months-long saga that saw heated courtroom battles, rival bids and the near-delisting of one of Japan's best-known firms.
"At the board meeting held today, our company has decided to conclude a contract to transfer stocks of Toshiba Memory to Pangea, a special purpose acquisition company formed by a consortium led by Bain Capital Private Equity," Toshiba said in a Japanese-language statement.
The deal is worth two trillion yen ($18 billion), Toshiba said, adding that it also planned a reinvestment worth 350.5 billion yen ($3.1 billion) in Pangea.
Toshiba said it aimed to complete the sale by March.
The announcement was a milestone in a protracted effort to sell the lucrative chip unit to revive the group's overall financial health.
Last week Toshiba said it had signed a memorandum of understanding with the Bain group as the leading candidate.
But at the time, the Japanese giant had held open the possibility it could still ink a deal with rival bidders Western Digital, Toshiba's US-based chip factory partner, or Taiwan's Hon Hai Precision, better known as Foxconn.
Toshiba and Western Digital were embroiled in a heated legal dispute over the sale, with the Japanese firm suing its US partner for trying to block a deal.
- Delisting fear -
Toshiba is the world's number two chipmaker behind Samsung and the division's products are found in many smartphones and electronic gadgets.
The chip unit accounts for around a quarter of Toshiba's total annual revenue and is the crown jewel in a vast range of businesses ranging from home appliances to nuclear reactors.
Toshiba narrowly averted a delisting this year, but it still faces the humiliating prospect of being yanked from Japan's premier stock exchange if the sale does not raise enough money.
Selling the chip division is seen as key to Toshiba's survival, as it battles to recover from multi-billion-dollar losses at its US nuclear operation Westinghouse Electric.
The Japanese industrial giant is still recovering from a disastrous earlier acquisiton of Westinghouse, which racked up billions of dollars in losses before being placed in bankruptcy protection.
Those huge losses came to light as the group was still reeling from revelations that top Toshiba executives had pressured underlings to cover up weak results for years after the 2008 global financial meltdown.
Its most recent results published in August revealed a loss of $8.8 billion in the last fiscal year, although it predicted it would swing back into the black this year.
The losses are a major embarassment for a cornerstone of Japan Inc, which traces its history back as far as 1875 when the company started life as a telegraph factory in what is now Tokyo's ritzy Ginza shopping district.
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