Toshiba has filed a no-nonsense response to threats by Western Digital to block the sale of its 50 per cent stake in their semiconductor joint venture, which manufactures in-demand NAND flash modules.
In two letters sent earlier this month, Toshiba asserts its legal right to sell its stake in the business to whoever it wants and points out that Toshiba did not block Western Digital's takeover of what is now its stake in the venture, when it acquired SanDisk, Toshiba's original partner, in May 2016.
"If Western Digital continues to interfere with Toshiba's rights to sell its affiliate -- rights embodied in the joint venture agreements that Western Digital itself relied on when it bought SanDisk -- Toshiba will have no choice but to pursue all available remedies," asserted Toshiba in one of the letters, seen by Bloomberg.
Toshiba also points out that Western Digital failed to ratify a proposal to formalise the relationship between the two companies after it acquired SanDisk and that, if it carries on sabre-rattling, it will bar Western Digital staff from the facilities, which are based in Japan and effectively controlled by Toshiba.
Western Digital has been given until Monday 15 May to comply with its demands.
In April, Western Digital threatened to block any takeover deal by any of the bidders, claiming that they were all unsuitable. The shortlist includes Hynix, Foxconn and Broadcom, as well as Western Digital, with Foxconn and Broadcom the front-runners. Toshiba is hoping to have the deal completed by March 2018.
Outgunned financially in the bidding, Bloomberg suggests that it will seek to join up with a private equity bid led by KKR.
Western Digital became Toshiba's 50-50 joint venture partners in the semiconductor manufacturing business after it acquired SanDisk in a $15.8bn deal in May 2016. Because of the high cost of that deal, Western Digital is unable to compete with other bidders for Toshiba's 50 per cent stake in that business - offering only around $9bn, according to reports, against up to $27bn bid by Foxconn.
What is mystifying, perhaps, is why Toshiba is looking to sell one of its prize assets in order to take a tarnished asset, Westinghouse, out of Chapter 11 bankruptcy when a more hard-headed business decision might be to abandon Westinghouse and hold-on to its semiconductor business instead.
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