Western Digital, Toshiba End Feud -- WSJ
December 13 2017 - 3:02AM
Dow Jones News
By Takashi Mochizuki
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 13, 2017).
TOKYO -- Toshiba Corp. and Western Digital Corp. agreed to
settle a dispute over Toshiba's planned sale of its memory-chip
unit, people involved the discussions said, clearing a major hurdle
to the nearly $18 billion deal.
Directors at both companies separately voted to drop legal cases
that they brought against each other, the people said. Lawyers are
preparing documents and a formal announcement is expected as soon
as this week, they said.
In September, Toshiba agreed to sell its NAND flash-memory
manufacturing unit to a group led by U.S. private-equity firm Bain
Capital LLC for about $18 billion. Apple Inc. and other U.S.
companies provided funding for the deal.
The Japanese industrial conglomerate was eager to raise money
after a March bankruptcy filing by its U.S. nuclear affiliate,
Westinghouse Electric Co., left it with liabilities in excess of
assets.
Western Digital acquired SanDisk, Toshiba's longtime flash
memory business partner, in 2016. It said it had a right of refusal
over any sale of the Toshiba unit and filed arbitration claims
earlier this year challenging the sale plans.
Under the proposed settlement, Toshiba would keep its
joint-venture ties with Western Digital, the people involved in the
discussions said. The two companies would continue jointly
investing in the chip unit to expand manufacturing capacity and
Western Digital would continue to have rights to sell part of the
unit's output.
Toshiba raised Yen600 billion ($5.3 billion) this month by
issuing new shares. Closing the chip deal would put Toshiba's
balance sheet more firmly in the black.
If the Western Digital dispute is resolved, the main remaining
hurdle to Toshiba's deal with Bain is antitrust reviews,
particularly by authorities in China.
NAND flash memory chips, used in smartphones, computer servers
and other electronic devices to store data, are in high demand.
Toshiba is a distant second to Samsung Electronics Co. in terms of
revenue from these products, according to research firm IHS Markit,
and analysts say Toshiba must complete the sale as soon as possible
to keep the South Korean maker from further cementing its
dominance.
While Toshiba was struggling to determine the future of its chip
unit for much of this year, Samsung made several big investment
plans to secure its leading position.
Write to Takashi Mochizuki at takashi.mochizuki@wsj.com
(END) Dow Jones Newswires
December 13, 2017 02:47 ET (07:47 GMT)
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