SK Group Chairman Chey Tae-won has expressed his confidence in acquiring Toshiba’s chip unit, implying that the group‘s chipmaking unit would take a different approach when the real race begins.
“The bidding for Toshibia currently being carried out is not binding. The (bidding) price has no significant meaning,” he told reporters after a lecture Thursday at a local university in Seoul.
”When (the process with) binding begins, things will change differently.“
SK Group Chairman Chey Tae-won (Yonhap)
The chairman was answering a question on whether the acquisition may become uncertain as SK hynix’s bid price appears to be smaller than other companies.
SK hynix reportedly proposed around 10 trillion won ($8.7 billion) for the Toshiba bid in partnership with Japanese financial investors.
The candidates for the Toshiba bid was recently narrowed down to four companies including SK hynix, Taiwanese firm Hon Hai Precision, also known as Foxconn, the world’s third largest memory chipmaker Western Digital and American private equity firm Silver Lake Partners.
Until a week ago, the US companies, Western Digital and Silver Lake Partners, were the strongest candidates because the Japanese government and Toshiba did not want to sell its chip unit to Chinese companies in fear of a technology leak.
However, the competition became heated after Hon Hai proposed a whopping 31 trillion won for the bid. Despite concerns over a possible technology leak to a Taiwanese company, the offer is attractive for Toshiba as it has been struggling from the growing losses caused by its troubled US nuclear business.
Toshiba president Satoshi Tsunakawa earlier said, “We will put priority on the price and the quick completion of transaction when selecting an acquirer.”
As Hon Hai is currently not producing chips, it does not have to undergo investigation regarding a monopoly issue in the US and the EU, which means a transaction can be completed more quickly than chipmakers SK hynix or Western Digital.
If SK acquires Toshiba, it will become the world’s second largest NAND flash maker. Currently, Samsung is the largest provider with a 37 percent share, followed by Toshiba with 18 percent, Western Digital with 17 percent, Micron Technology with 10 percent and SK hynix with 9.6 percent.
However, even if SK hynix buys the chip unit, it may suffer from the winner’s curse, Daishin Securities said. SK hynix reportedly has 4 trillion won in cash asset, much lower than the 20 trillion won of the estimated bidding price. If the firm excessively borrows money for the acquisition, it may face a financial struggle when the boom of the chip business slows down.
By Shin Ji-hye (shinjh@heraldcorp.com)
