A Toshiba Sale Hits Resistance -- WSJ
15 May 2017 - 5:03PM
Dow Jones News
By Ted Greenwald
Western Digital Corp. on Sunday ratcheted up the pressure in its
dispute with Toshiba Corp., filing a request for binding
arbitration to prevent the troubled Japanese company from selling
its stake in operations jointly owned by the two companies.
In its arbitration request, Western Digital claims Toshiba
breached its contract by transferring its interest in the
flash-memory joint ventures to an affiliated company without
Western Digital's consent.
The request is the latest spat between Western Digital and
Toshiba, which is trying to sell its profitable memory-chip
business in an effort to bolster its ailing finances. Western
Digital, which jointly owns a flash-memory semiconductor plant in
Japan with Toshiba, has said the Japanese company promised not to
sell its stake without Western Digital's approval.
Toshiba has accused Western Digital of interfering with the
chip-business sale and threatened to sue the California company
unless it drops the breach-of-contract assertion.
A Toshiba spokesman on Monday declined to comment specifically
on Western Digital's arbitration request but reiterated his
company's view that the planned sale doesn't violate any agreement
between the two firms and that Western Digital has no right to stop
it.
Western Digital said Sunday that the contracts forming the joint
ventures, which involve NAND flash-memory chips used in data
storage, include provisions that require one party's consent before
the other party can sell its stake. Western Digital also said the
agreements allow one party to seek arbitration and an injunction if
it believes the other party has breached the terms.
A panel in San Francisco will hear the arbitration under the
rules of the International Chamber of Commerce, as required by the
joint-venture agreements, Western Digital said. The arbitration
would kick off a legal process that could take more than a
year.
Toshiba in its most recent earnings report warned that its
future was uncertain after losses at its U.S. nuclear unit,
Westinghouse Electric Co., which filed for bankruptcy in March.
Toshiba has said the sale of the chip business is crucial to its
survival.
On Monday, Toshiba said it expected to book a net loss of Yen950
billion ($8.4 billion) for the fiscal year ended March 31 due to
losses stemming from the Westinghouse filing. For the current
fiscal year, Toshiba said it expected to book a net profit of Yen50
billion.
Several companies are bidding for the Toshiba semiconductor
unit, including Western Digital as well as Foxconn Technology Group
of Taiwan, SK Hynix Inc. of South Korea, and U.S.-based Broadcom
Ltd. The joint ventures at issue originally were formed between
Toshiba and SanDisk Corp., a supplier of memory for smartphones.
Western Digital acquired SanDisk in 2016.
--Takashi Mochizuki in Tokyo contributed to this article.
Write to Ted Greenwald at Ted.Greenwald@wsj.com
(END) Dow Jones Newswires
May 15, 2017 02:48 ET (06:48 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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