Everyone’s a winner as Toshiba and Western Digital end legal warfare

It’s official: Toshiba’s drawn out legal battle with Western Digital is come to an end. (Or so we hope, as you never really know with this case.) After months of court hearings, legal threats and boardroom meetings Toshiba has thrashed out a deal to appease its noisy partner.

In the end it’s good news for all concerned. Toshiba can finally focus all of its attentions on completing the sale of its memory chip unit to a consortium led by Bain capital and including Apple. Meanwhile Western Digital – who never really threatened the sale with its legal battle – has been given assurances that it can continue using Toshiba’s future factories and chip supplies.

In the end the two sides have agreed to end the conflict. As a result TMC and Western Digital will jointly fund the Fab 6 project, a flash chip factory being built at Yokkaichi, Japan, including the investment announced by Toshiba in October 2017. Western Digital will also participate in a new flash wafer fabrication facility that will be constructed in Iwate, Japan. WDC and Tosh will extend the terms of their joint-ventures: Flash Alliance will be extended to December 31, 2029, and Flash Forward to December 31, 2027. Toshiba and Western Digital are agreed on the sale of Toshiba’s subsidiary TMC to the Bain-led consortium (the biggie for Toshiba). And the two companies have agreed on mutual protections for their assets and confidential information in connection with the sale of TMC, and on collaborating to ensure the future success of TMC as a public company following an eventual IPO.

However, Toshiba could have a new headache to contend with from within. Earlier this week it emerged that a Hong-Kong based investor has told Toshiba directors to pull out of its $18 billion sale of its chip unit to a consortium led by Bain Capital and including Apple. The shareholder claims that due to a recent capital injection, the funds are no longer needed.

According to Reuters, Argyle Street Management Ltd, a hedge fund with $1.2 billion under management, sent the letter to Toshiba’s board urging it to pull out of the sale. Argyle is also calling on the 30-plus overseas investors who participated in Toshiba’s recent 600 billion yen ($5.3 billion) new share issue to team up and is already in talks with at least three funds who share the same view, Chan said.