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Broadcom backs away from $20 billion bid for Toshiba chip business

  • Broadcom had arranged a fully financed bid, sources say.
  • Toshiba says it picked a consortium of preferred buyers.
  • Western Digital has sued to block the sale.
Hitoshi Yamada | NurPhoto | Getty Images

Broadcom has backed away from a $20 billion bid for Toshiba's memory chip business, sources said.

Toshiba announced Wednesday it had selected a consortium led by the public-private Innovation Network Corp. of Japan (INCJ) as a preferred bidder. Other members of the consortium include Bain Capital Private Equity and the Development Bank of Japan.

Chipmaker rival Broadcom had lined up a fully financed bid, sources said, but backed away after Western Digital took legal action to block Toshiba's sale of the business, the sources said. Western Digital and Toshiba jointly operate a semiconductor plant in Japan.

The sources said Broadcom would continue to monitor Western Digital's lawsuit.

In a statement, Toshiba said Wednesday it determined that the consortium "presented the best proposal, not only in terms of valuation, but also in respect to certainty of closing, retention of employees, and maintenance of sensitive technology within Japan."

— Reporting by Saheli Roy Choudhury

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