Western Digital Corp has
sought for an injunction in California Superior Court in order to prevent the
selling of memory chips belonging to Toshiba, its partner in a manufacturing
joint venture.
The company said in a
statement that it is seeking an injunction to block the Japanese conglomerate
from transferring its interests in the three-flash memory joint chip production
operation under Toshiba Memory Corp, and the decisions are likely to be made by
mid-July at an earliest.
The companies have locked
horns as Toshiba tries to raise money to plug a multi-billion dollar write down
following a disastrous investment in the nuclear power equipment business. The
legal step may add, yet another impairment to an already complicated process.
Toshiba’s transfer of the JV
interests was an effort to defuse Western Digital’s initial complaint about the
Japanese company’s previous plan to spin its stake in the flash-memory JV, into
a new subsidiary would have been without its partner U.S’ consent. Earlier this
month, Western Digital warned it would not abandon its request to take the
matter to arbitration.
“Toshiba has no right to
offer to transfer its joint venture interests to a third party and has no ability
to enter into any transaction with a third party without obtaining our
consent,” Western Digital said. “We are confident in our ability to protect our
interests and rights.”
On May 14, Western Digital
filed a request with the ICC Inernational Court of Arbitration, asking it to
look into the matter, specifically, regarding to the three NAND flash-memory joint
ventures.
Western Digital CEO, Steve
Milligan, said in the statement, “Western Digital has been working tirelessly
to reach an agreement that is beneficial to all stakeholders. Toshiba
Corporation’s attempt to circumvent our contractual rights has left us with no
choice but to take this action.”
“Left unchecked, Toshiba
would pursue a course that clearly violates these rights,” he added.
“We cannot comment as we have not yet received
the complaint,” said Kaori Hiraki, a spokeswoman for Toshiba. “We are
proceeding with selecting the preferred bidder by the second half of June, and
will seek to close the definitive agreement by June 28.”
Steve Milligan, CEO of
Western Digital, traveled last week to press for an acquisition of the
division, as he continues to spar with Toshiba over the legality of the sale.
Western Digital is planning to offer 2 trillion yen ($18.2 billion), but
Toshiba is skeptical of the bid because of its financing and conditions.
Toshiba is trying to restore
its finances, which had been dented by an accounting scandal and a $6.3 billion
write down related to its nuclear unit. Shares were down 2% in Tokyo on early Thursday,
trimming an early decrease of as much as 5.8%.
Toshiba is reportedly looking
for $18 billion from the sale and was hoping to select a preferred bidder by
Thursday. The most recent reports said that SK Hynix, a South Korean
semi-conductor chip maker, is set to join a joint bid led by the Japanese
government’s Ministry for the Economy, Trade and Industry (METI), countering a
$20 billion offer from US chip maker Broadcom.
Unless Toshiba removes negative net worth by March 2018, it will face
Meanwhile, Toshiba Corp traded 1.02%, or 3, to 316JPY, by 3:00PM GMT+9. It opened in 301JPY, with a session high of 323JPY, and a session low of 295JPY. Its market capitalization was 1.34 trillion.
On the other hand, by 7:54PM GMT-4, Western
Digital Corp traded 2.50%, or 2.25, to $87.80. It opened in $90.25, with a
session high of $90.47 and a session low of $86.93. Its market capitalization
was 26.58 billion, and its dividend yield was 2.28%.
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Western Digital Seeks Injunction to Prevent Sale of Toshiba Chips
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