It looks like Toshiba could be facing a major roadblock in the sale of its semiconductor business. This time around, reports claim that Western Digital is seeking an injunction to prevent Toshiba from selling off that part of the business.
Western Digital and Toshiba share a 50-50 ownership of the NAND flash factory in Japan as part of a joint venture. WD’s share was previously held by SanDisk before WD acquired it last year. Now, Toshiba is looking to sell and it appears that Western Digital isn’t exactly on board with the idea.
WD is claiming that Toshiba is barred from auctioning off the factory due to the terms of their partnership. Toshiba would need to obtain Western Digital’s consent before selling its share. Toshiba is currently in the process of selecting its preferred bidder, so in order to stop things before they get too far, WD is resorting to harder legal tactics:
“Toshiba Corporation’s attempts to circumvent our contractual rights have left us with no choice but to take this action. It is our concern that, left unchecked, Toshiba would pursue a course that clearly violates these rights and also runs decidedly counter to the best interests of the joint venture and also to the hard working people at Toshiba Corporation’s NAND flash business in Japan”.
“The anti-transfer provisions of the relevant agreements between Toshiba and SanDisk, which govern their NAND flash memory joint ventures, are unambiguous and explicitly require that Toshiba obtain SanDisk’s consent prior to any transfer of joint venture interests. Toshiba has acknowledged and validated SanDisk’s consent rights on multiple occasions in the past. As a result, we have been left with no choice but to take further steps to ensure that Toshiba does not unilaterally pursue a course of action that violates our clear contractual rights – one that would also be to the detriment of the joint venture and Japan at large”.
At the moment, a formal injunction has not been filed but it appears to be one of the legal avenues that Western Digital is pursuing.
KitGuru Says: Toshiba has had its share of troubles recently but burning partnerships likely won’t help matters. It will be interesting to see how this develops going forward.