Apple discussing $3 billion stake in Bain Chip bid

TOKYO: Apple Inc is playing the role of kingmaker in the contentious battle for Toshiba Corp’s memory chips business.

The iPhone maker is in talks to provide about $3 billion in capital for Bain Capital’s bid for the unit, adding to financial support from Dell Inc, Seagate Technology and SK Hynix, according to people familiar with the matter. That support convinced Toshiba to sign a MoU with Bain and work toward a final agreement this month, said the people, asking not to be identified because the matter isn’t public.

Apple plans to take an equity stake alongside Bain, they said. If the agreement is completed, it may exceed Apple’s largest deal ever, the $3 billion acquisition of Beats Electronics.

Apple is helping swing the deal away from Western Digital, one of Apple’s own suppliers that tried to buy the chips unit with KKR & Co. Apple’s money will help fill a gap left when state-backed Innovation Network Corp of Japan and Development Bank of Japan decided to pull back from the Bain bid in the face of litigation from Western Digital.

Toshiba has been in negotiations for months to sell off its chips business and pay for a disastrous move into the US nuclear business. The company needs to raise the money by March to avoid seeing its shares delisted from the Tokyo Stock Exchange. The auction has been complicated by legal action from Western Digital, which has argued it should have veto rights in any sale because of its partnership with Toshiba in the chips business.

The Japanese company disputes that and sued Western Digital for more than $1 billion for interfering in the auction.

Apple has opposed Western Digital’s bid and decided to back Bain because of the business’s strategic importance, the people said. Apple depends on flash memory from Toshiba in its iPhones and wants a continued supply so it’s not dependent on rival Samsung Electronics.