Toshiba Hits Back at Western Digital in Spat Over Memory Chip Business

Toshiba Hits Back at Western Digital in Spat Over Memory Chip Business”

Western Digital has said that the structure of the joint ventures between its subsidiary, SanDisk, and Toshiba precludes Toshiba from selling the memory business without its approval.

"Toshiba's board of directors has determined to continue negotiations with the Bain-led consortium on the basis of this new proposal, and the company will work to expedite the conclusion of a stock purchase agreement by the end of September", the company revealed in a statement.

Toshiba is selling its memory chips business to help pay for an expensive move into the USA nuclear business, according to Bloomberg. Bloomberg reports that Apple's contribution could help swing the deal in Bain's favour.

Reuters, citing anonymous sources, also reported that the new bid is structured to allow consortium members Innovation Network Bank of Japan (INCJ) and the Development Bank of Japan to invest only after pending arbitration with Western Digital has been resolved.

Apple has a policy of not commenting on rumours and speculation.

Toshiba's massive red ink began with the reactors it has been building in the USA, which are still unfinished, partly because of beefed up safety regulations following the 2011 Fukushima nuclear disaster.

If Toshiba's net worth remains negative for two consecutive years, it will be delisted from the Tokyo Stock Exchange.

Sources have said that discussions with Western Digital faltered as Toshiba, fearing its partner was angling to eventually take over the chip business, sought to limit the US firm's future stake in the unit.

Toshiba is the second largest supplier of NAND flash memory, with market share of about 18 percent in the second quarter, according to market watcher DRAMeXchange. The Japanese company disputes this and sued Western Digital for more than $1bn for interfering in the auction. At the time, the Bain consortium offered about 2.1-trillion yen ($19.1bn) and included INCJ and DBJ. The Development Bank of Japan is backed by the Japanese government.

But after Western Digital opposed the move, it said it was talking to others.

In the meantime, Yuji Sugimoto, MD for Bain in Japan, worked to win Apple's support.

"Our goal has been - and remains - to reach a mutually beneficial outcome that satisfies the needs of Toshiba and its stakeholders, and most importantly, ensures the longevity and continued success of the JVs".

Foxconn Technology Group, the Taiwanese company that makes Apple's iPhones, made an appeal this month for its own effort to acquire Toshiba's chip unit, detailing support from partners including Apple.

Toshiba has missed several self-imposed deadlines to reach a final deal.

Earlier in the day, US private-equity firm Bain Capital Private Equity LP signed a memorandum of understanding with Toshiba, intending to reach a deal to buy the memory-chip business by a Bain-led consortium.

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