Western Digital protests Toshiba deal to sell chip unit to Bain Capital for $18 billion – Orange County Register

Toshiba’s board signed off Wednesday on selling its computer chip business to a group led by Bain Capital Private Equity, but the deal’s future remains unclear as Toshiba’s U.S. joint venture partner Western Digital opposes it.

Japanese electronics and nuclear company Toshiba Corp., which needs the sale to survive, said it hopes the deal, estimated at $18 billion, will close by the end of next March.

Toshiba announced last week that it has entered into an agreement with the Bain Capital group. But San Jose-based Western Digital immediately said it opposed the sale of the NAND flash-memory SanDisk joint venture, stressing it will continue with legal action.

Western Digital, which was founded in Santa Ana and long based in Lake Forest, said in a statement Wednesday said it was “disappointed that Toshiba would take this action despite Western Digital’s tireless efforts to reach a resolution that is in the best interests of all stakeholders.”

The company, which acquired SanDisk for $19 billion in 2016, said it was confident arbitration would help resolve conflicts posed by Toshiba’s chip division sale.

“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,” the company stated Wednesday.

Toshiba has been battered by massive losses related to its U.S. nuclear operations at Westinghouse Electric Co., which filed for bankruptcy earlier this year. Its decline, including earlier scandals centered on inflated bookkeeping, is one of the most dramatic downfalls of a major Japanese company long known for quality.

The chosen consortium also includes South Korea’s SK Hynix and other Japanese and foreign companies, and $3.2 billion will be invested to stabilize the chip business operations, Toshiba said in a statement. The deal will go through regardless of the legal wrangling with Western Digital, it said, without elaborating.

Toshiba’s massive red ink began with reactors it has been building in the U.S. which are still unfinished, partly because of beefed-up safety regulations following the 2011 Fukushima nuclear disaster.

Toshiba’s earnings reports initially failed to get endorsements from its auditors, meaning that it could have been delisted.

But the auditors finally signed off in August after an investigation that centered on whether Toshiba had known…

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