Toshiba settles legal disputes with Western Digital

Cornelia Mascio
Dicembre 13, 2017

Toshiba is seeking to sell its profitable flash-memory unit as part of an effort to avoid having its stock delisted in Japan due to struggles at its USA nuclear subsidiary, Westinghouse.

But even though legal issues with Western Digital have been resolved, antitrust screening in major global markets could still be a major hurdle.

But its USA partner Western Digital had threatened to block the sale.

"We are very pleased to have reached this outcome, which clearly benefits all involved", Toshiba Senior Executive Vice President Yasuo Naruke, also the president of Toshiba Memory, said in a joint statement released Wednesday.

Toshiba needs to sell the chip business to cover heavy losses at its U.S. nuclear unit. With the concerns about litigation and arbitration removed, we look forward to renewing our collaboration with Western Digital, and accelerating TMC's growth to meet growing global demand for flash memory.

News of the settlement saw Toshiba's shares rise 2.3% in early trading in Japan. -South Korean group led by USA fund Bain Capital.

South Korean chipmaker SK Hynix Inc's participation in the Bain consortium has infuriated Western Digital and a key sticking point in recent weeks had been how to ensure it would be blocked from accessing proprietary information that belonged to the chip unit, sources have previously said.

As the legal action could have delayed the sale, Toshiba had to draw up a contingency plan in case the deal did not close in time. Western Digital, which past year acquired Toshiba's longtime chip-unit partner SanDisk, had maintained that the sale couldn't go through without its approval.

After failing to win the bid, Western Digital took legal action against Toshiba arguing that the deal could not happen without its consent due to their existing joint venture partnership in the memory chip business.

Without additional joint investment from Western Digital, Toshiba will not be able to sell the cutting-edge flash memory chips with improved storage capacity, dealing a blow to its profits. They will also continue talks about jointly investing in Toshiba's new plant in Iwate Prefecture that will start construction next year.

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