US judge pauses quest to block Toshiba chip unit sale

Kuwait Times - - BUSINESS -

SAN FRAN­CISCO: A Cal­i­for­nia judge put on hold Fri­day a re­quest by Western Dig­i­tal to block the sale of Toshiba’s chip di­vi­sion, sug­gest­ing a more col­lab­o­ra­tive or­der. San Fran­cisco Su­pe­rior Court Judge Harold Kahn gave Toshiba and Western Dig­i­tal un­til a July 28 hear­ing to draft an or­der re­quir­ing the Ja­panese com­pany to give its Sil­i­con Val­ley part­ner two weeks’ no­tice be­fore clos­ing a sale of the di­vi­sion. In the mean­time, the court or­dered Toshiba to not com­plete the sale.

Toshiba lawyers have con­tended in court doc­u­ments that sell­ing to the high bid­der in­ter­ested in the chip di­vi­sion was not ex­pected to close un­til early next year at the ear­li­est. The hear­ing was held to con­sider a re­quest by Western Dig­i­tal for an in­junc­tion stop­ping Toshiba from sell­ing in­ter­ests in three NAND flash-mem­ory joint ven­tures op­er­ated with Western Dig­i­tal’s SanDisk sub­sidiaries.

“Our en­tire goal was to pre­serve and pro­tect our rights through the bind­ing ar­bi­tra­tion process, and that’s pre­cisely what the court has done to­day,” Western Dig­i­tal chief ex­ec­u­tive Steve Mil­li­gan said in a re­leased state­ment pro­claim­ing the out­come of the hear­ing a vic­tory. Toshiba was free to con­tinue ne­go­ti­a­tions for the sale of the chip di­vi­sion as the mat­ter made its way to likely ar­bi­tra­tion in an in­ter­na­tional fo­rum.

Kahn pro­posed a “fi­nessed” al­ter­na­tive to the in­junc­tion sought by SanDisk that pre­serves le­gal op­tions of both sides with­out stalling sales dis­cus­sions, ac­cord­ing to Toshiba. Ex­ec­u­tives at cri­sis-hit Toshiba faced hun­dreds of an­gry share­hold­ers last month as the firm an­nounced it has not yet clinched a deal to sell its prized chip busi­ness to a con­sor­tium of US, Ja­panese and South Korean in­vestors. The sale, re­port­edly worth about 2.0 tril­lion yen ($18 bil­lion), is seen as cru­cial for the cash-strapped com­pany to plug mas­sive losses at its US nu­clear di­vi­sion, West­ing­house Elec­tric.

Toshiba said it had en­tered into ex­clu­sive talks with the pub­lic-pri­vate In­no­va­tion Net­work Corp. of Ja­pan, state-backed De­vel­op­ment Bank of Ja­pan and US pri­vate eq­uity fund Bain Cap­i­tal, with South Korean chip­maker SK Hynix act­ing as a len­der. Toshiba is the world’s num­ber-two sup­plier of mem­ory chips, be­hind South Ko­rea’s Sam­sung. The sale in­volv­ing state-backed buy­ers means the Ja­panese gov­ern­ment will ef­fec­tively own the chip di­vi­sion.

The prof­itable di­vi­sion has ac­counted for about one-quar­ter of Toshiba’s to­tal an­nual rev­enue. The chip unit sale is seen as key to Toshiba’s turn­around. Western Dig­i­tal, which jointly runs a key chip plant in Ja­pan, op­poses the sale. Toshiba’s chief ex­ec­u­tive has blasted the US firm’s bid for a court in­junc­tion as “un­fair in­ter­fer­ence.” Toshiba later said it has filed a 120 bil­lion yen ($1 bil­lion) law­suit against its US part­ner over the dis­puted deal.—AFP

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