Toshiba and Western Digital have reached a (sort of) agreement over the sale of the Japanese conglomerate’s chip business. Toshiba has agreed to give Western Digital two weeks’ notice before closing any sale of a memory chip unit that would involve transferring joint venture shares that Western Digital claims give it a say in the $18 billion sale of the unit.
And while it would appear that the much-anticipated sale of Toshiba’s valuable chip business is one step closer to finally going ahead, it will in reality drag on for a while longer yet. Notice from Toshiba to Western Digital will give the US firm the opportunity to come back to the court or an arbitration panel to argue for a chance to stop the deal.
South Korean chipmaker SK Hynix and Japanese-government backed banks that offered $18 billion and are reportedly Toshiba’s favoured offer. But that deal has not come together, so Toshiba’s board met last week to consider other bidders.
Toshiba had hoped to tie up a deal by the end of June, but an injunction request from company partner Western Digital prevented any sale from being finalised. It was reported in June that the company had given shareholders until the end of the month to decide on a potential buyer. But the last minute request from Western Digital scuppered that plan.
All of this comes in an effort to make up the $18 billion it needs pay off huge loans it has accrued. The nature of the sale has seen the Japanese government heavily involved, with emphasis being placed on keeping the firm within the country.
Toshiba’s financial woes are largely connected to its failed nuclear unit Westinghouse. Acquired in 2006, an ill-advised purchase in 2015 has led to massive scandal and loses for its parent company. Last month Westinghouse filed for a Chapter 11 bankruptcy and Toshiba is attempting to split from the company. Since revealing its financial turmoil a number of investors have shown an interest in Toshiba’s technology businesses.