As Japan’s Toshiba Corp. wrangles out key issues in last-minute negotiations over a 49.9 percent stake in its NAND flash business with its first choice group led by Bain Capital of the U.S. backed by South Korean chipmaker SK Hynix, state-sponsored Japanese investors are likely to walk away with the bigger 50.1 percent to ensure the lucrative memory chip business stays in Japan.

According to leaks of details in the closely-watched $18 billion quest for the world’s second largest flash memory business, Bain Capital will contribute 600 billion yen ($5.36 billion) for a 49.9 percent in Pangea, a special purpose vehicle created to acquire Toshiba’s flash memory business. SK Hynix will be providing some of the funds to Bain and reportedly is demanding the option of the bonds turning into stake in the equity fund as to ensure voting rights in the memory business in later time.

The other 50.1 percent stake will go to Japanese entities as Tokyo is determined not to lose its only competitive semiconductor business to other countries.

State-backed Innovation Network Corporation of Japan (INCJ) and Development Bank of Japan will have 33.4 percent of so-called “commanding rights” on the memory entity. Industry sources note that the Japanese government will have practical control on one-third of shares in the memory entity through INCJ. Optical instrument maker HOYA and other strategic investors will be pulled in to secure another 10 percent.

U.S. technology companies Apple Inc. and Dell Technologies Inc. will have no voting rights as they would join via purchase of preferred shares.

By Hwang Hyung-gyu and Jung Wook

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