Bain Capital, Apple, and DVMT part of consortium
In September 2017, Seagate (STX) announced its participation in the consortium led by Bain Capital Private Equity to acquire Toshiba’s (TOSYY) memory business. The other companies that are part of this consortium are Apple (AAPL) and Dell Technologies (DVMT). This consortium successfully bid $18.0 billion for Toshiba’s chip business.
During Seagate’s fiscal 1Q18 earnings call, CEO Dave Mosley stated, “We are pleased to be part of the consortium and to help facilitate maintaining Toshiba Memory as a world-leading, independent NAND technology company.”
Seagate has developed a long-term partnership with Toshiba and is optimistic about the latter’s leadership in NAND technology. The top three flash memory vendors in terms of market share are Samsung (SSNLF), Toshiba, and Western Digital (WDC) with shares of 35%, 20%, and 15%, respectively. Seagate is expected to contribute $1.3 billion to finance the Toshiba acquisition.
Seagate aims to enter into a long-term NAND supply agreement with Toshiba, which is likely to expand the company’s product portfolio. Seagate has already developed its NAND storage technology portfolio over the last few years and now has a broad offering of flash-based products targeting multiple markets.
Seagate expects this acquisition of Toshiba to help in product innovation that will provide enterprises with storage solutions in the HDD (hard disk drive) and SSD (solid state drive) space. This acquisition may potentially result in revenue growth in Seagate’s NAND storage segment as well as provide significant value for customers.
Seagate beat WDC in Toshiba bid
Western Digital was another firm interested in acquiring Toshiba’s memory chip business and had bid $13 billion for the same. WDC was banking on its long-standing joint venture (that started way back in 2000) to acquire Toshiba Memory. WDC then set up a consortium with the Innovation Network of Japan, the Development Bank of Japan, and US private equity firm KKR as well as revised its acquisition bid to $17.3 billion.