Western Digital Seeks Injunction to Prevent Sale of Toshiba Chips

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 delisting from Tokyo stock Exchange.

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 Western Digital Seeks Injunction to Prevent Sale of Toshiba Chips Reviewed by Trade12 Reviews on 3:07 AM Rating: 5

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