TAIPEI — Hon Hai, the world’s largest electronics contract manufacturer, has topped rival bidders with a 3 trillion yen ($27 billion) offer to force through the acquisition of Toshiba Corp’s semiconductor unit, according to press reports.
The deal, which still faces opposition, would be the second large takeover of a Japanese company for Hon Hai in about 12 months. The Taiwanese company, which counts Apple as its largest customer, last year overcame the resistance of the Japanese government to win control of Sharp Corp.
Hon Hai has offered nearly a third more than rival bidders including SK Hynix and Broadcom to take over the Toshiba chip unit, a Bloomberg report said, citing people who are familiar with the matter.
Toshiba is selling off billions of dollars of assets to offset losses from its Westinghouse nuclear division in the wake of the Fukushima nuclear disaster. The Japanese government has been seeking a domestic buyer for the flash memory unit in order to keep strategic semiconductor technology in domestic hands.
The Hon Hai-led deal could result in the transfer of the Toshiba operations and technology to China, where most of Hon Hai’s factories are located. In recent years, the Chinese government has gone on the acquisition trail to buy overseas chip companies as it seeks the last remaining core technology that it lacks in the electronics business.
Toshiba may seek a bailout through a type of group financing in which multiple domestic companies contribute buyout capital. Fujifilm Holdings is the only Japanese company so far to have expressed an interest in the plan.
Hon Hai has talked with potential partners, including Hynix, about a joint bid, but the prospect of transferring operations to China has been a sticking point. For its part, Hynix has negotiated for a joint bid including Japanese investors that would give Hynix no more than 20 percent of the chip business.
Broadcom has considered joining with private equity investor Silver Lake on a bid in addition to making an offer on its own. Broadcom’s position outside the flash memory business would exempt it from the anti-trust scrutiny that Hynix would face.
—Alan Patterson covers the semiconductor industry for EE Times. He is based in Taiwan.