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Toshiba Tells Western Digital To Back Off On Quashing Chip Deal
Source: BRIAN DEAGON   Editor: Helan   Update Time :2017/9/15 17:56:55

Japanese conglomerate Toshiba fired back at Western Digital (WDC) Thursday for statements made about their battle over the future of a memory chip unit, valued at more than $18 billion.

Toshiba, on Tuesday, announced it had a memorandum of understanding with a group led by Bain Capital and Korea-based chip company SK Hynix, affirming the intent of both parties to reach an agreement regarding the sale of Toshiba Memory Corp. by the end of this month. Reports say the Bain group has bid $19 billion for the chip company.

Western Digital had led another group to buy the chip business, with an offer reportedly at $18.2 billion, and spent months in a legal battle over the sale. Western Digital acquired a stake in the business, resulting from its $15.8 billion SanDisk acquisition, giving it certain contractual rights. It's those rights that are in dispute.

"Toshiba regrets that Western Digital persistently overstates its limited consent rights in public statements," Toshiba said in a statement issued Thursday. "As Toshiba has previously stated, the confidential agreements between SanDisk and Toshiba provide no reasonable basis for Western Digital's assertions that it is entitled to prevent a sale of TMC."

Western Digital, through its SanDisk unit, opposes the chip sale and on Wednesday implied it might continue legal action. Shares of the Western Digital inched up 5 cents to 85.79 on the stock market today.

"It is surprising that Toshiba would continue to pursue a transaction with a consortium led by Korea-based SK Hynix and Bain Capital Japan without SanDisk's consent," Western Digital said in a prepared statement Tuesday. "The language in the relevant joint venture agreements is unambiguous, and multiple courts have ruled in favor of protecting SanDisk's contractual rights. We remain confident in our ability to protect our joint venture interests and consent rights."

Toshiba replied that the "confidential agreements between SanDisk and Toshiba provide no reasonable basis for Western Digital's assertions that it is entitled to prevent a sale of TMC."

Toshiba said it was disappointed "by Western Digital's misleading statements regarding the outcome of ongoing litigation between the two companies. Toshiba said the parties "have merely agreed, before a single court, to provide notice when an agreement for the sale of TMC is signed — and prior to a related closing — for a limited period of time, until arbitration between the companies is underway."

Toshiba said it expects to complete a sale of TMC by March 2018, and looks forward to a favorable resolution of SanDisk and Western Digital's exaggerated claims in arbitration.

The Toshiba unit makes a popular computer memory chip known as Nand flash, which is used in a wide variety of consumer electronics and in chip-based data storage systems. Toshiba is 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, in addition to its strong presence in the memory chip market, is also the largest provider of disk drives.

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