[September 28, 2017] |
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Notice on the Signing of a Share Purchase Agreement with a Bain Capital-Led Consortium for the Sale of Toshiba Memory Corporation
Toshiba (News - Alert) Corporation's Board of Directors (TOKYO:6502) (Toshiba), as
announced on September 20, 2017, "Notice on the Sale of Toshiba Memory
Corporation," has approved the sale of all shares of Toshiba Memory
Corporation (TMC), a wholly owned subsidiary of Toshiba, to K.K. Pangea
(Pangea), a special purpose acquisition company formed and controlled by
a Bain Capital Private Equity, LP (including its affiliates, Bain
Capital)-led consortium (the Consortium). Today, Toshiba has entered
into a Share Purchase Agreement (SPA) with Pangea. An outline of the
agreement follows.
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1.
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Names of Seller and Purchaser
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Seller: Toshiba Corporation
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Purchaser: K.K. Pangea
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2.
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Target (News - Alert) Shares
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All shares of TMC
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3.
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Purchase Price
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Two trillion yen
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This amount is based on estimated debt, working capital, and capital
expenditures by Toshiba and TMC. Any discrepancy with actual figures
will be addressed by a purchase price adjustment determined after
the closing of the share purchase.
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If the shares held by Toshiba in three joint venture entities* are
not transferred to TMC, the estimated value of such shares in the
joint ventures as of the end of the month before closing will be
deducted as a purchase price adjustment.
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*Flash Partners, Ltd., Flash Alliance, Ltd. and Flash Forward, Ltd.
are three joint ventures between Toshiba, SanDisk LLC, a subsidiary
of Western Digital (News - Alert) Corporation, and certain SanDisk subsidiaries for
the joint investment in equipment used at TMC's Yokkaichi facilities
in the production of NAND Flash Memory.
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4.
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Outline of Investment in Pangea
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Pangea will fund the acquisition of TMC directly or indirectly from:
Toshiba 350.5 billion yen (re-investment); Bain Capital 212 billion
yen; Hoya Corporation (Hoya) 27 billion yen; SK hynix, Inc. (SK
hynix) 395 billion yen; US investors 415.5 billion yen. In addition,
Pangea intends to secure loans in the amount of approximately 600
billion yen from financial institutions and banks.
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US investors are comprised of Apple Inc., Kingston Technology
Corporation, Seagate (News - Alert) Technology plc, and Dell Technologies Capital.
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With Toshiba and Hoya's investments, Japan-based companies will hold
more than 50% of the common stock in Pangea, and going forward
Japan-based companies will continue to hold a majority. After the
TMC shares are transferred to Pangea, Bain Capital and TMC
management will lead TMC's business operations to secure continuous
growth.
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The US investors will not acquire any common stock or voting
rights over TMC. In addition, SK hynix will be firewalled from
accessing TMC proprietary information and will not permitted to
own more than 15% of the voting rights in Pangea or TMC for a
period of 10 years as provided by the terms of the agreement.
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Innovation Network Corporation of Japan (INCJ) and Development Bank
of Japan Inc. (DBJ), which operate as neutral, independent
organizations dedicated to promoting industrial competitiveness,
have also expressed their interest in investing in Pangea or TMC at
a later time, subject to satisfaction of certain conditions. Toshiba
plans to leave decision-making in respect of the exercise of a
portion of its voting rights held in Pangea to INCJ and DBJ, while
Toshiba will retain the right to exercise these voting rights in its
own discretion in certain circumstances.
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5.
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Fundamental Conditions for Execution of the TMC Share Transfer
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(1)
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Securing antitrust approvals in certain jurisdictions
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(2)
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Securing certain approvals in respect of national security
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(3)
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No prohibition of the share transfer by a governmental authority
(for reasons other than (1) above)
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(4)
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Agreement to the share transfer by the general meeting of Toshiba
shareholders, under Article 467 (1) (ii) of Japan's Companies Act
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Western Digital Corporation (Western Digital) has sought to prevent
a transfer of Toshiba's interests in certain Joint Ventures between
Toshiba and SanDisk (News - Alert) LLC (SanDisk), a subsidiary of Western Digital,
to any third party. Toshiba and SanDisk are currently engaged in
litigation and arbitration. The SPA contemplates that the sale of
TMC will be consummated even if the Joint Venture interests have not
been transferred to TMC prior to the closing, unless the transfer of
TMC's stock itself is blocked by an injunctive order.
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Upon satisfaction of all conditions, the closing of the share
transfer will be on the first business day of the month immediately
following the month in which the conditions are satisfied or waived.
If such conditions are not satisfied or waived at least 11 business
days prior to the first business day of such month, then the closing
shall take place on the first business day of the following month.
If the conditions are satisfied or waived during the period starting
on February 15, 2018 and ending on the end of March 23, 2018, the
closing shall occur on March 30, 2018.
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The SPA requires both Toshiba and Pangea to use their reasonable
best efforts so as to complete the closing (including obtaining
certain approvals from lease investors, cooperating on settling
imposts and taxes after the share transaction, and taking measures
to secure certain loans to Pangea), and Toshiba intends to close by
the end of March 2018.
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View source version on businesswire.com: http://www.businesswire.com/news/home/20170928005485/en/
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