Western Digital CEO to return to Japan, seeking Toshiba deal
Trip next week aims to settle spat over memory unit with compromise
TOKYO -- Western Digital CEO Steve Milligan will visit Japan again next week to continue talks on the contested sale of Toshiba's memory unit, looking to soften the Japanese partner's hardening stance with a compromise, it was learned Thursday.
The U.S. hard-drive maker, which produces chips with Toshiba, has firmly opposed the sale of Toshiba Memory, arguing that any transfer of the business without its consent would violate joint venture agreements. It filed an arbitration request in May to block the ongoing auction and has been pursuing one-on-one negotiations.
Toshiba holds that Western Digital's consent is not needed if the company holding the stakes in the joint ventures is sold, rather than the stakes themselves. The Japanese conglomerate's permission was not sought when its original joint venture partner, SanDisk, was acquired by Western Digital last year.
The two sides agreed to continue talks toward resolving the row when Milligan visited Japan late last month. Since then, efforts to reach a deal have foundered over Western Digital's insistence on a majority stake.
Toshiba seeks to wrap up the sale before the fiscal year ends in March so it can use the proceeds to rebuild its finances after massive losses on U.S. nuclear operations. It would prefer that its partner limit itself to a minority interest to avoid a lengthy antitrust review. Japan's industry ministry is also concerned that vital chip technology could leave the country.
Another point of contention is Western Digital's relatively low offer for the business. The company has proposed paying around 1.7 trillion yen to 1.8 trillion yen ($15.2 billion to $16.1 billion), including contributions from partners such as investment funds, while some bids through the auction process have topped 2 trillion yen.
Milligan is expected to meet with Toshiba President Satoshi Tsunakawa during next week's visit. Concessions on terms could go some way toward promoting reconciliation.
The CEO will inform the Japanese side that Western Digital is considering adding a seventh chip fabrication facility at a jointly run production base in Yokkaichi, Japan, if it buys the memory unit. He also hopes to win over the industry ministry with assurances that cutting-edge technology will remain limited to Japanese plants.