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Western Digital seeks ban to prevent Toshiba from selling its chip business to...
[TechWeb Report] On September 27, according to Reuters, Western Digital announced on Tuesday that it is seeking a legal ban to prevent Toshiba from selling its semiconductor business to its competitors. The move comes as Toshiba prepares to sell its chip unit to a consortium led by Bain Capital and South Korean chipmaker SK Hynix.
This latest legal action by Western Digital aims to block any transaction involving Toshiba’s chip business without its approval. However, the $18 billion deal between Toshiba and the Bain-led group has not yet been finalized. Toshiba recently informed its major lenders that Apple, one of its key partners and a major customer, has not yet approved the core terms of the agreement.
Western Digital has filed a request with the International Chamber of Commerce's Court of Arbitration (ICC), following an earlier lawsuit where it claimed that no deal could proceed without its consent. An arbitration panel composed of three arbitrators was formed earlier this week, and a decision on the proposed ban is expected later this year, with the final ruling likely to be issued before 2019.
For Toshiba, time is of the essence. The company needs to finalize the sale of its chip division quickly in order to raise billions of dollars to cover the massive debts caused by its bankrupt U.S. nuclear subsidiary, Westinghouse Electric. Failure to do so could lead to its delisting from the Tokyo Stock Exchange.
Even if Toshiba manages to close the deal with Bain immediately, it will still need to navigate a lengthy regulatory review process, which typically takes at least six months. On Wednesday, Western Digital submitted another arbitration request to stop Toshiba from investing in a new chip factory in Yokkaichi, Japan, unless Western Digital's subsidiary, SanDisk, is also allowed to participate in the investment.
The situation highlights the growing tensions between the two companies as they compete for control over a critical part of the global semiconductor market. With high stakes involved, the outcome of this dispute could have far-reaching implications for the industry.