At last minute, Western Digital resubmits bid for Toshiba chip unit


Western Digital enjoys a 50-50 joint venture in NAND flash production with Toshiba Memory Corp, which Toshiba is selling off in order to stabilise the company following a financial scandal.

Western Digital (NYSE:WDC) will continue trying to block Toshiba's (OTCPK:TOSBF, OTCPK:TOSYY) chip unit sale to the INJC-backed consortium due to the participation of chipmaker SK Hynix, per Reuters.

The BBC has seen a letter sent by Western Digital's board to Toshiba in which they warn they "will not consent to a transaction with the proposed consortium" because of concerns over the involvement of South Korean rival SK Hynix, which they fear will try to benefit from the technology at stake.

According to a report by Bloomberg, some of Toshiba's potential investors are taking time to conduct their due diligence in the semiconductor sale, partly because of Western Digital's claims.

Toshiba wants to sell the unit quickly to cover billions of dollars in cost overruns at its bankrupt Westinghouse nuclear unit and to dig itself out of negative shareholder equity that could lead to a delisting. But Japan's Ministry of Economy, Trade and Industry, which oversees the INCJ, supports its current consortium.

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On Friday, Toshiba Chief Executive Satoshi Tsunakawa said that he was open to talks with Western Digital, but in light of Milligan's letter, a talk may not be enough to prevent legal action.

SK Hynix declined to comment on the matter on Monday.

Last week, it was reported that Toshiba planned to sell its semiconductor business to a consortium led by the Japanese government that also includes companies from Japan, the US and South Korea.

Tsunakawa said on Friday he did not expect any changes to the make-up of the consortium before June 28, adding that Western Digital' s offer had not found favour on price and because the US firm wanted to take control of the unit.

It has sought a USA court injunction to prevent any deal that does not have its consent.