Toshiba has selected a consortium led by Bain Capital to acquire Toshiba Memory Corporation, the semiconductor business of the Japanese electronics and engineering giant.
It marks - or ought to mark - the conclusion of an auction process that has gone on for more than six months. Bain is believed to have bid more than $22bn, which is well in excess of the $8bn-$10bn opening bids Toshiba received at the start of the process.
However, the sale could still be delayed after Western Digital, one of the main rival bidders, which has a 50 per cent stake in a series of manufacturing joint ventures with Toshiba Memory Corporation, filed a further claim in the International Chambers of Commerce (ICC) International Court of Arbitration.
And SK Hynix, which is helping to finance the Bain-led bid, admitted today that talks were still continuing, raising fears that Toshiba might fail to nail down a deal before the end of the financial year.
Failure to sell the business and use the proceeds to plug a yawning gap in its finances following the Chapter 11 bankruptcy protection filing of Westinghouse could see Toshiba removed from the Tokyo Stock Exchange at the end of March next year.
Western Digital responded to the Toshiba announcement with renewed threats of legal action, arguing that Toshiba breached the terms of an agreement between WD's SanDisk subsidiary, which co-owns manufacturing facilities in Japan with Toshiba Semiconductor Corp, by unilaterally investing in new manufacturing equipment at Fab 6 of the complex.
WD has therefore announced the filing of an additional ‘request for arbitration' with the ICC's International Court of Arbitration.
"The arbitration demand seeks, among other things, a permanent injunction preventing Toshiba from making unilateral investments in manufacturing equipment for Fab 6 without first giving SanDisk the opportunity to make a comparable investment in expansions and conversions of joint venture capacity for BiCS 3D NAND flash memory," claimed WD in a statement issued late last night.
The company also provided this official comment: "The terms of the agreement and our related legal rights are clear. The agreement gives SanDisk the right to participate in expansions and conversions of manufacturing capacity for BiCS 3D NAND flash memory products through joint investments in Fab 6 equipment.
"Toshiba has improperly denied SanDisk its rights to joint investment by unilaterally investing in manufacturing equipment at Fab 6."
However, it added that it believed that its NAND supply requirements through until 2019 should be secure.
The new arbitration request follows on from arbitration filings in May and July as the auction of Toshiba Memory Corp turned nasty between the two companies.
While Toshiba had initially preferred the higher bid from the consortium led by Bain Capital, talks had stalled last month over the threat of legal action from WD, using its ownership of SanDisk and the joint ventures SanDisk as with Toshiba Memory Corp as leverage.
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