Toshiba Mulls Buying SanDisk Gear In Chip Venture..
campanaro | October 21, 2008 at 01:10 pmby
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The Times of India
Oct 21 2008
TOKYO: Japan's Toshiba Corp is considering buying partner SanDisk Corp's share of equipment at the two firms' joint memory chip venture to thwart Samsung Electronics Co Ltd's takeover bid for SanDisk, sources at Toshiba and Sandisk said.
But Toshiba, which cut its first-half outlook to a loss as chip prices tumbled, is not eager to follow through on the plan, estimated at more than 100 billion yen, or over one-third of its cash, one company source said.
"It would give us more control over the venture, but I don't know if we would go through with this," said the source, who spoke on condition that his name not be used. "The company needs to build new plants and buy new equipment to stay competitive."
SanDisk earlier rejected a $26-per-share offer from the world's top memory chip maker, Samsung, which made the deal public last month. Sources told Reuters earlier this month that a mid-$30s per-share offer might be more
amenable to SanDisk.
The takeover would hurt Toshiba if it meant the loss of SanDisk, the biggest U.S. retailer of flash memory cards, as both an investment partner and a customer.
Toshiba, the world's No.2 maker of NAND flash memory, has been floating a plan to buy half of SanDisk's share of equipment at two jointly run plants, said a source at Sandisk who was not authorised to comment, confirming a Nikkei report on Saturday.
Buying SanDisk's equipment would be negative for Toshiba in the near term, because it would widen losses in Toshiba's chip business and could mean that SanDisk need not buy as many chips from the venture, Credit Suisse analyst Hideyuki Maekawa said in a note to investors.
Toshiba and SanDisk, which holds key patents in flash memory, forged an alliance in 1999 and have jointly invested in plants for NAND flash memory, used in such devices as cellphones, digital cameras and MP3 players.
Toshiba is expected to post an operating loss of 30 billion yen in April-September, its first operating loss for the period in five years, largely as a result of a slide in NAND prices.
A Toshiba spokeswoman declined to comment on the report. As of 0400 GMT, Toshiba shares were down 0.3 percent at 358 yen, underperforming a 1.9 percent gain in the benchmark Nikkei average.
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