Western Digital proposed to pull its bid to acquire Toshiba’s NAND memory chip division in exchange for being granted more corporate power over their joint venture, people close to the tech giants revealed on Tuesday, as first reported by Reuters. The sale of the business stalled due to Western Digital’s insistence that the Tokyo, Japan-based company cannot liquidate the division without its approval, which led to a complex legal battle between the two which now may be closer to a final resolution.
Western Digital is said to have previously partnered with Development Bank of Japan, Innovation Network of Japan, and private equity company KKR & Co in order to launch a $17.4 bid for Toshiba’s unit, yet the two were unable to come to an agreement in regards to Western Digital’s stake in the joint venture which already raised some concerns among top government officials in the Far Eastern country and could prompt an in-depth antitrust review if the deal was to advance in its current state. A prolonged government investigation is something that Toshiba is seeking to avoid at all costs, with the company currently pushing to finalize the sale of its unit by the end of the year and cover its recently incurred losses before facing more severe consequences of the thereof next year. Recent reports indicate that the original bid still stands yet Western Digital is prepared to remove itself from the consortium that launched it, thus avoiding any major antitrust probes and facilitating Toshiba’s effort to sell the business by the end of the calendar year. In exchange, the U.S. tech giant is seeking a stronger position in their joint venture and is specifically asking Toshiba for new investments which the firm would be prepared to match, the insiders claim. Toshiba’s Board of Directors is scheduled to meet tomorrow and will discuss Western Digital’s proposal, though it’s currently unclear how likely is the company to accept it.
Toshiba is seeking to liquidate its memory division in an effort to balance its books prior to early 2018 when it’s facing the possibility of being delisted from Tokyo’s stock exchange due to major financial issues caused by the bankruptcy of its nuclear business Westinghouse Electric Company in Pennsylvania, United States. While the NAND chip-making subsidiary of Toshiba is currently one of its largest revenue generators and is hence the easiest one to sell, the company previously concluded it cannot hold on to it due to major near-term risks associated with a delisting.