Struggling electronics giant Toshiba Corp. has agreed to sell its semiconductor subsidiary to a consortium that includes its current business partner, Western Digital Corp. (WD), and two Japanese government-backed funds.

Under the agreement, the ratio of voting rights held by WD, a major U.S. semiconductor maker, will be kept to less than one-third of all the voting rights of subsidiary Toshiba Memory, sources said on Aug. 26.

Toshiba, based in Tokyo, is scheduled to conclude the final agreement with member organizations of the group by the end of this month at the earliest after deciding details of the agreement with them, they added.

The group includes not only WD but also U.S. investment fund KKR & Co. and two Japanese government-backed funds, Innovation Network Corp. of Japan (INCJ) and Development Bank of Japan Inc. (DBJ).

According to the sources, Toshiba plans to sell the subsidiary to the consortium for about 2 trillion yen ($18.3 billion), which will help cover massive losses from its U.S. nuclear business.

WD is likely to invest 150 billion yen to buy Toshiba Memory’s corporate bonds, which can be converted to ordinary shares.

If all the corporate bonds purchased by WD are converted to ordinary shares, WD will have 16 percent of the voting rights. The percentage will be kept to less than one-third of all the voting rights so that WD does not have veto power on important management issues. WD will also not seek to have its representatives serve on Toshiba Memory's board.

WD had demanded that if other member organizations of the group sell their Toshiba Memory shares, they will sell them to WD. Under the basic agreement, however, the member organizations can sell their shares freely.

Toshiba and the member organizations of the group also agreed that Toshiba Memory will be listed on a stock exchange in the future.

Steve Milligan, chief executive officer of WD, is expected to travel to Japan in the near future for final discussions with Satoshi Tsunakawa, president of Toshiba.

WD plans to withdraw its appeal to an international court of arbitration that was aimed at stopping the sale of Toshiba Memory to buyers other than WD.

Toshiba also plans to invest 100 billion yen to 200 billion yen in Toshiba Memory. Japanese organizations are expected to hold the majority of voting rights of Toshiba Memory.