June 10, 2017 5:01 am JST

Toshiba battles against clock on chip unit sale

Lingering conflict with Western Digital complicates decision making

TOKYO -- Toshiba is scrambling to decide on a buyer of its memory-chip business by the end of the month, but lingering discord with U.S. partner Western Digital may hamper the efforts.

The U.S. hard-drive company has been fiercely resisting a sale of Toshiba's chip business to a third party. It brought the matter to the International Court of Arbitration on May 15, in a jab to other bidders.

If Toshiba ignores Western Digital's demand, the U.S. company could sue them. And without Western Digital's support, it would be challenging for Toshiba Memory's mainstay plant in Mie Prefecture to sustain its operations.

If the court issues a provisional injunction to block the sale, Toshiba would have to halt the process.

After incurring a massive loss in U.S. nuclear-power business Westinghouse Electric, Toshiba was at a negative net worth of an estimated 540 billion yen ($4.89 billion) at the end of March.

To avoid a negative net worth for a second straight year -- as of March 2018 -- and to stay listed on the stock market, Toshiba intends to sell its memory-chip business. Taking into account the time it takes to complete the sale, it needs to decide on a buyer by the end of June.

Toshiba has been considering selling the business to a consortium including Western Digital. Top leaders of the two companies have met almost every month to find a common ground.

One of the likely winners of the deal would be a Japan-U.S. consortium led by the public-private fund the Innovation Network Corp. of Japan. Investment fund Kohlberg Kravis Roberts and Bain Capital are each exploring a collaboration with the INCJ, as is Western Digital.

U.S. semiconductor company Broadcom is at an advantage in terms of its offer price of more than 2 trillion yen and that it likely will clear antitrust screenings more easily; Western Digital opposes this arrangement.

(Nikkei)

Toshiba Corp.

Japan

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