Toshiba, Western Digital Settle Chip Unit Dispute (News)

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So what happened? Toshiba wanted to sell its chip business to a consortium led by Bain Capital for roughly $18 billion.

Western Digital ( WDC ) raised its financial outlook late Tuesday after settling a lengthy legal battle with Japanese conglomerate Toshiba that removed a major overhang regarding access to advanced memory chips. WD came into the joint venture through its acquisition of SanDisk, Toshiba's original partner in the 17-year joint venture. Toshiba is seeking to sell its profitable flash-memory unit as part of an effort to avoid having its stock delisted in Japan due to struggles at its USA nuclear subsidiary, Westinghouse.

The struggling Japanese conglomerate said Wednesday that it had settled a legal dispute with Western Digital, the U.S. data storage company, that threatened to block the microchip deal.

The two companies will also consider joint investment in a planned factory in Kitakami, Iwate Prefecture. It is basically back where it was before the sell-off was announced, when it had every expectation of participating in future flash fab investments. The joint agreements had been scheduled to begin expiring in 2021. "In addition, we have put in place equity transfer restrictions" on Toshiba Memory, he added. (TMC) to the Bain group that includes Western Digital competitors Seagate, Kingston Technologies and SK Hynix, along with its customers Dell and Apple. Toshiba will also withdraw its case against Western Digital.

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"Western Digital's core priorities have always been to protect the joint ventures and ensure their success and longevity, guarantee long-term access to Nand supply and create long-term value for our stakeholders", Western Digital Chief Executive Steve Milligan said in a prepared statement.

The U.S. -based company gets to invest and be a part of the Toshiba's new flash chip manufacturing facility which is now under construction in Yokkaichi, Japan. "We have no plans to manufacture NAND flash, nor do we have the ability to manufacture outside of the joint agreement", he said.

The prospect that Western Digital's legal challenges might derail the sale to Bain was daunting for Toshiba, but Toshiba possessed leverage of its own.

Yasuo Naruke, senior executive vice president of Toshiba Corp. and CEO of TMC, said he expects the Bain deal to close by the end of March 2018. The pair said they have reached "a global settlement agreement to resolve their ongoing disputes in litigation and arbitration, strengthen and extend their relationship, and enhance the mutual commitment to their ongoing flash memory collaboration".


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