Toshiba settles fight with Western Digital, moves away from financial brink
- Author: Santos West Dec 14, 2017,
Dec 14, 2017, 3:22
Western Digital and Toshiba settled their NAND dispute with an out-of-court settlement that allows Toshiba's sale of its NAND chip business while WD keeps its stake in the companies' joint venture. Western Digital, however, opposed the planned sale, and filed in May an arbitration request with the global arbitration court against Toshiba, seeking to block the sale.
As part of the settlement, Toshiba and Western Digital will extend existing agreements for their chip joint ventures in Yokkaichi, central Japan, until 2027 or later.
Toshiba Corp and its joint venture partner Western Digital Corp have made peace over the embattled Japanese electronics giant's plan to sell its flash memory unit to raise cash to stay afloat.
Western Digital has been opposed to the sale to Bain, and threatened to block any moves in that direction through legal action, citing joint venture agreements between the two companies that it says gave it first bidding rights. It may have to clear further hurdles, such as possible anti-trust concerns. If the planned sale is approved by antimonopoly authorities, procedures for the sale will be completed, paving the way for Toshiba to take major steps forward for reconstructing its businesses.
The struggling Japanese conglomerate said Wednesday that it had settled a legal dispute with Western Digital, the United States data storage company, that threatened to block the microchip deal.
Bain Capital, which has led the deal to acquire a third share in TMC, is also happy with the outcome.
Argyle is inviting the 30-plus overseas investors who participated in Toshiba´s new share issue to team up in opposition to the deal although it remains to be seen just how much traction it will gain.
He said the plan will ensure Toshiba Memory has the resources it needs to compete in the flash memory market, which is growing quickly with advances in artificial intelligence and networks for products that have internet connections, known broadly as the "internet of things".
Toshiba was under heavy pressure to sell the chip unit in order to cover massive losses from its nuclear division and avoid having its stock delisted from Japan's stock exchanges. Western Digital wanted to buy Toshiba's memory business itself for a reduced fee due to the booming demand for NAND flash, which is a critical storage component for most next-generation technologies.
The prospect that Western Digital's legal challenges might derail the sale to Bain was daunting for Toshiba, but Toshiba possessed leverage of its own.
Toshiba has said it hopes the chip unit sale, estimated at about $18 billion, will close by the end of March. The transaction is still subject to regulatory approvals.