Western Digital would settle for smaller Toshiba Memory stake
Compromise sought to break impasse on sale
TOKYO -- Western Digital has offered to acquire less than 20% of Japanese partner Toshiba's memory chip arm, compromising on its prior demand for a majority stake in a bid to get negotiations moving.
In addition to limiting its stake in Toshiba Memory to 19.9%, the American hard-drive maker will scrap plans to eventually turn the unit into a subsidiary. Western Digital CEO Steve Milligan is expected to discuss the proposal with Toshiba President Satoshi Tsunakawa in Japan this week.
The U.S. company is teaming with a consortium including the public-private Innovation Network Corp. of Japan, the government-backed Development Bank of Japan and major Toshiba lenders to purchase Toshiba Memory. Western Digital will discuss increasing the offer to around 2 trillion yen ($18 billion) -- the Japanese conglomerate's asking price.
Western Digital has opposed the sale of the memory unit to any third party and insisted on taking a controlling stake, seeking to maintain joint chipmaking operations in Japan. This demand has met resistance from Toshiba, which worries that the ensuing antitrust reviews would keep it from completing the sale by the end of its fiscal year in March. The conglomerate aims to use the proceeds to shore up finances badly damaged by losses on U.S. nuclear operations. Japan's industry ministry has also raised objections, fearing that key technology could leak overseas.
The spat has escalated in recent weeks. Western Digital filed a request for arbitration in mid-May to block the sale, arguing that Toshiba's transfer of its interest in joint ventures with the American company to Toshiba Memory violated related agreements. Toshiba took back the stakes Saturday, aiming to render this argument moot.