Western Digital Seeks Injunction to Block Toshiba Chip Sale – Bloomberg

Western Digital Corp. asked a court in California for an order blocking the sale of the chip unit of Toshiba Corp., its partner in a manufacturing joint venture.

The U.S. company is trying to stop Toshiba from transferring joint ventures that they have together in preparation for a sale, it said in a statement Wednesday. Western Digital on Wednesday asked a San Francisco state court to keep the sale on hold while it pursues arbitration.

The companies are increasingly at odds as Toshiba tries to raise cash to plug a multibillion-dollar writedown following a disastrous investment in the nuclear power equipment business. The legal step may add yet another impediment to an already complicated process. Toshiba shares were down 2 percent at midday in Tokyo.

“We cannot comment as we have not yet received the complaint,” said Kaori Hiraki, a spokeswoman for Toshiba. “We are proceeding with selecting the preferred bidder by the second half of June, and will seek to close the definitive agreement by June 28.”

Western Digital wants to make sure Toshiba’s chipmaking operation isn’t bought by a competitor, a development that could disrupt its access to chips that are the future of the computer storage business that provides it with the majority of its revenue. The U.S. and Japanese companies have clashed over their agreement and what legal rights Western Digital has to have a say in the sale.

“Toshiba has no right to offer to transfer its joint venture interests to a third party and has no ability to enter into any transaction with a third party without obtaining our consent,” Western Digital said in the statement. “We are confident in our ability to protect our interests and rights.”

Western Digital Chief Executive Officer Steve Milligan traveled to Tokyo last week to press for an acquisition of the division, as he continues to spar with Toshiba over the legality of the sale. Western Digital is planning to offer 2 trillion yen ($18.2 billion), a person familiar with the matter has said, but Toshiba is skeptical of the bid because of its financing and conditions.

Toshiba previously told Western Digital not to interfere in the sale and that it may take legal action. It also said the U.S. company failed to formalize their relationship after Western Digital became its flash-memory manufacturing partner with the acquisition of SanDisk Corp. last year.

The case, which wasn’t immediately available in court records, is SanDisk LLC v. Toshiba Corp, CGC17559555, California Superior Court, County of San Francisco.

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