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Toshiba retaliates, takes Western Digital to court

Transpacific tug of war over sale of Toshiba Memory escalates

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Toshiba and Western Digital   © Reuters

TOKYO -- Toshiba, continuing its fight for survival, has filed a case with the Tokyo District Court seeking an injunction against its memory business partner Western Digital.

In a press release issued on Wednesday, Toshiba said it is "seeking a provisional disposition order for an injunction against acts of unfair competition."

The statement also says Toshiba has brought a suit against Western Digital Corporation and its subsidiary Western Digital Technologies seeking a "permanent injunction, damages and payment of 120 billion yen."

Toshiba is "alleging violation of the Unfair Competition Prevention Act, among other things," the release says.

Toshiba decided on June 21 to negotiate with a consortium led by the state-backed Innovation Network Corp. of Japan as the preferred bidder for its memory chip unit. It needs the deal to go through to avoid showing a negative net worth for two consecutive years. Western Digital opposes the sale and has sought an injunction in a California court.

The Japanese company accuses Western Digital of "continually interfer[ing] with the bid process related to the sale of Toshiba Memory Corporation." Further, it says that the U.S.-based company "exaggerated its consent right [under joint venture agreements between Toshiba and Western Digital subsidiary SanDisk] in both public statements and private communications to bidders and others involved in the sale process." By doing so, Toshiba says, Western Digital has damaged Toshiba's and TMC's reputation.

The announcement came after the conclusion of Toshiba's annual general shareholders meeting the same day, where President Satoshi Tsunakawa apologized for delaying the company's earnings report for the year through March.

Toshiba booked a net loss of 995 billion yen ($8.9 billion) for the recently concluded fiscal year due to a loss at its U.S. nuclear arm. Toshiba shareholders' equity had fallen to negative 581 billion yen as of March 31.

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