Western Digital goes to court to block Toshiba chip unit sale

TOKYO: Western Digital Corp said it has sought a court injunction that would prevent Toshiba Corp from selling its NAND chip business until its arbitration case against the Japanese conglomerate has been decided.

Western Digital, which jointly operates Toshiba’s main chip plant, wants to buy the highly prized semiconductor unit and has been at loggerheads with the Japanese firm over an auction that could see the unit end up with a rival company.

In May, the California-based firm sought international arbitration arguing that Toshiba needs its consent for any sale and that Toshiba has breached their joint venture contracts by entertaining outside bids.

Toshiba’s “attempts to circumvent our contractual rights have left us with no choice but to take this action, Western Digital’s CEO Steve Milligan said in a statement.

“Left unchecked, Toshiba would pursue a course that clearly violates these rights,” he added.

The injunction is being sought in the Superior Court of California. Toshiba declined to make immediate comment.

Toshiba wants at least US$18 billion (RM76.6 billion) for the chip business and hopes to complete the deal as quickly as possible to help cover billions of dollars in cost overruns at its now-bankrupt Westinghouse nuclear unit.

Given the jockeying, Toshiba had given up on choosing a winning bid yesterday to negotiate the deal, said a person with direct knowledge of the matter. Sources had said the company was aiming for a decision yesterday, though a spokeswoman insisted the deadline for the decision was the second half of June.

Yesterday, Toshiba shares shed earlier losses and ended up 1.02% to ¥316.5 (RM14). – AFP, Reuters