TOKYO (Reuters) - Toshiba Corp ( 6502.T ) now favors a group led by Bain Capital LP and SK Hynix Inc ( 000660.KS ) to buy its prized semiconductor business, as it failed to bridge key gaps with its business partner and rival bidder Western Digital Corp ( WDC.O ), two people briefed on the matter said on Tuesday.

The parties have already missed two deadlines by Toshiba’s banks, which want a deal to pump $18 billion or more into the company to pull it out of negative shareholder equity and prevent it from being delisted.

The 2 trillion yen ($18 billion) bid led by Western Digital Corp ( WDC.O ) and U.S. private equity fund KKR & Co ( KKR.N ) had been in the lead, sources had previously said.

But those talks hit snags as Toshiba, fearing that Western Digital was angling to eventually take over the Chip business, sought to control the U.S. firm’s stake in return for a better position in their current chipmaking joint venture, the sources said.

Tuesday’s reversion to the Bain group contradicts a report earlier in the day in the Nikkan Kogyo business daily that Toshiba had chosen the Western Digital bid and would announce the deal on Wednesday.