Toshiba Offers To Take Over Bankrupt OCZ Business

Max Smolaks,

The popular yet unprofitable SSD brand is likely to survive

Japanese engineering and electronics giant Toshiba has made an offer to buy the US solid state drive (SSD) manufacturer OCZ for an undisclosed amount, as the latter prepares to file for bankruptcy.

OCZ has had a really bad year, suffering from a shortage of flash memory chips and rapidly losing revenue. The trading of the company’s shares was suspended on the Nasdaq on Wednesday after the price failed to get above $1 over the last 30 days.

OCZ has a market capitalisation of approximately $43 million (£26.3m). According to Reuters, the company has “substantially completed” negotiations with Toshiba, which is after the assets including intellectual property and a moderately successful flash server storage business.

Survival of the fittest

OCZ was long predicted to go the way of the Dodo. Despite the popularity of its products among PC enthusiasts, the company hasn’t made any profit in five years.

OCZEarlier in 2013, OCZ took out a $30 million loan from Hercules Technology Growth Capital (HTGC) in order to patch up its finances amidst a global shortage of NAND chips, putting its assets up as collateral. The company couldn’t pull through, and on Monday, HTGC took control of its accounts at Silicon Valley Bank and Wells Fargo.

Meanwhile, Toshiba has been mounting a successful challenge to its long-time competitors in the storage market, Seagate and Western Digital, especially in regards to flash memory. The Japanese company actually invented NAND chips way back in 1989, and ships flash and hybrid storage with its own chips onboard, unlike Seagate, which has to buy them from Samsung.

Toshiba could leverage OCZ technology in its own products, as well as use the familiar brand to peddle its wares in the US.

Earlier this year, Western Digital acquired struggling US flash storage manufacturer Stec in a similar deal worth $340 million.

OCZ expects to file for bankruptcy after signing an agreement with Toshiba and HTGC. If for some reason the deal doesn’t go through, the company plans to liquidate.

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