Toshiba sues JV partner Western Digital

tokyo — Toshiba Corp said on Wednesday that it is suing its joint venture partner Western Digital over the US company’s opposition to a plan to sell the Japanese electronics and energy giant’s memory chip unit.

Toshiba said in a statement that it was seeking a permanent injunction and $1.1 billion in damages for what it called interference in the effort to sell Toshiba Memory Corp. Financially strapped Toshiba needs the cash from selling its flash memory unit to survive, but Western Digital contends its Japanese partner has no right to sell the memory chip unit without its consent. Such sales can be sensitive because they involve the transfer of valuable technology.

Western Digital owns some SanDisk chip operations including the joint venture in Japan with Toshiba. It has submitted its own bid for the memory chip business, but last week Toshiba announced it had chosen a consortium led by a Japanese government-backed fund and Bain Capital Private Equity as the preferred bidder. There was no immediate comment from Western Digital as 140-year-old Toshiba convened a shareholders meeting Wednesday outside Tokyo.

Toshiba had said it hoped to reach agreement with the consortium on the proposed $18 billion sale before that meeting. But earlier in the day it said negotiations were taking longer than expected. The lawsuit Toshiba filed in Tokyo District Court contends that Western Digital has exaggerated its right to a say in the planned sale.

“WD’s claims are false, designed only to interfere with the sale process, and have damaged Toshiba and Toshiba Memory Corp,” Toshiba said in a statement. It also accused Western Digital of “improperly obtaining” trade secrets by transferring SanDisk employees holding confidential information into the US company. —