Toshiba Agrees to Sell Chip Unit to Bain-led Group

Article By : Dylan McGrath

Latest twist in months-long saga has Toshiba agreeing to sell for $18 billion to group that includes Apple, Dell and sk Hynix, leaving Western Digital out in the cold.

SAN FRANCISCO — Toshiba said it signed an agreement to sell its semiconductor unit to a consortium led by private equity firm Bain Capital for about $18 billion, the latest twist in a months-long saga over the Japanese conglomerate's effort to sell its prized NAND flash business to offset massive losses incurred by its U.S. nuclear power subsidiary.

Toshiba said the deal is based on the premise that the sale would move forward even if courts impose an injunction against Toshiba in response to legal challenges brought by Western Digital, the parent company of Toshiba’s long-time partner in the NAND flash business, SanDisk.

The deal, agreed to by Toshiba’s board of directors at a meeting Wednesday (Sept. 20), came just hours after the Retuers news service, citing anonymous sources, reported that Toshiba was once again leaning toward accepting a rival bid from Western Digital.

Toshiba said it hoped to sign a final agreement “soon” in hopes of closing the sale by the end of its fiscal year in March. However, it is unclear how the legal action brought by Western Digital — which contends that Toshiba needs SanDisk’s permission to sell the unit — would affect the potential sale.

Western Digital said in a statement that it was “disappointed Toshiba would take this action despite Western Digital’s tireless efforts to reach a resolution that is in the best interests of all stakeholders.”

Western Digital also reiterated that it expected to win its arbitration against Toshiba at the International Chamber of Commerce. The company said the cases “continue to move forward,” but did not say when it expects the arbitration hearing.

“The arbitration process is ongoing and there is no specific calendar set, but the company will provide updates as appropriate,” a spokeswoman for Western Digital said in an email exchange with EE Times.

The Western Digital statement read, in part, “It is troubling that Toshiba would pursue this transaction without SanDisk’s consent, as the language in the relevant JV agreements is unambiguous, and courts have entered multiple rulings in favor of protecting SanDisk’s contractual rights. Toshiba has also acknowledged and validated SanDisk’s legitimate consent rights on multiple occasions.”

A California court ordered in July that Toshiba must provide Western Digital with at least 14 days of notice prior to close the sale.

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