Apple Is Said to Discuss $3 Billion Stake in Bain Chip Bid

Apple is playing the role of kingmaker in the contentious battle for Toshiba’s memory chips business, according to Bloomberg.

The iPhone maker is in talks to provide about $3 billion in capital for Bain Capital’s bid for the unit, adding to financial support from Dell, Seagate and SK Hynix, according to people familiar with the matter. That support convinced Toshiba to sign a memorandum of understanding with Bain and work toward a final agreement this month, said the people. Apple plans to take an equity stake alongside Bain. If the agreement is completed, it may exceed Apple’s largest deal ever, the $3 billion acquisition of Beats.

The company is helping swing the deal away from Western Digital, one of Apple’s own suppliers that tried to buy the chips unit with KKR & Co. Apple’s money will help fill a gap left when state-backed Innovation Network Corp. of Japan and Development Bank of Japan decided to pull back from the Bain bid in the face of litigation from Western Digital.

Apple has opposed Western Digital’s bid and decided to back Bain because of the business’s strategic importance, the people said. Apple depends on flash memory from Toshiba in its iPhones and iPods, and wants a continued supply so it’s not dependent on rival Samsung Electronics. Toshiba said it “regrets“ that Western Digital is persistently overstating its rights and that the Japanese company is committed to completing the chip sale by March.

Toshiba selected a Bain-backed group as its preferred bidder in the chip sale in June, as the Tokyo-based company sought to close the deal that month. At the time, the Bain consortium offered about 2.1 trillion yen ($19.1 billion) and included INCJ and DBJ. The effort was hampered by opposition from Western Digital, which solicited support from Japanese government officials and banks.

Yuji Sugimoto, managing director for Bain in Japan, worked to win Apple’s support. The precise composition of the Bain group is still in flux and may change. There is no guarantee they will be able to reach a final agreement with Toshiba. Foxconn, the Taiwanese company that makes Apple’s iPhones, made an appeal this month for its own effort to acquire Toshiba’s chip unit, detailing support from partners including Apple. Still, officials have opposed selling to Foxconn because of its ties to China.