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▼ Toshiba, WD Agree on Settlement Terms
- Category:Event
Toshiba Corp., which is undergoing business reconstruction, announced Wednesday that it had settled its dispute with Western Digital Corp. of the United States over the planned sale of its memory chip subsidiary, Toshiba Memory Corp.
Toshiba and Western Digital will each withdraw legal actions and jointly invest in a new facility at the Yokkaichi plant in Yokkaichi, Mie Prefecture, for production of the most advanced memory chips, in which the two companies have a partnership.
With the settlement, one of the obstacles for the planned sale of Toshiba Memory is removed. If the planned sale is approved by antimonopoly authorities, procedures for the sale will be completed, paving the way for Toshiba to take major steps forward for reconstructing its businesses.
According to the announcement, Western Digital approves of Toshiba’s sale of Toshiba Memory to a Japan-U.S.-South Korea consortium, led by Bain Capital of the United States, and will withdraw all pending litigation and arbitration actions, including a petition filed with the International Court of Arbitration to block the sale. Toshiba will also withdraw its case against Western Digital.
In addition to investing in the new facility at the Yokkaichi plant, Toshiba and Western Digital also agreed to extend a contract on the joint production up to 2029.
Yasuo Naruke, senior executive vice president of Toshiba and president of Toshiba Memory, released a statement, saying, “With the concerns about litigation and arbitration removed, we look forward to ... accelerating Toshiba Memory’s growth.”
Western Digital Chief Executive Officer Steve Milligan said during a conference call for investors, “This agreement is a win-win for all parties.”
Toshiba, having fallen into the situation of having liabilities in excess of assets due to huge losses incurred in the nuclear business in the United States, decided in January to sell the memory unit. Western Digital, however, opposed the planned sale, and filed in May an arbitration request with the international arbitration court against Toshiba, seeking to block the sale. As a countermeasure, Toshiba in June filed a lawsuit with the Tokyo District Court against Western Digital, seeking damage compensation.
In September, Toshiba decided to sell Toshiba Memory to the Japan-U.S.-South Korea consortium, with Western Digital not being a participant, for ¥2 trillion. The two firms’ confrontation thus became increasingly conspicuous.
But they began talks for a settlement in November. Because of fierce competition in the memory chip business, it is said to be necessary to make capital investments of several hundred billion yen every year.
To maintain Toshiba Memory’s competitiveness, it is considered better for Toshiba to jointly invest with Western Digital. The U.S. company, for its part, was seen to face a decline in international competitiveness unless it makes joint investments in the new plant facility project.
Not making such investments would leave Western Digital unable to receive supply of the next-generation memory chips.
Toshiba and Western Digital will each withdraw legal actions and jointly invest in a new facility at the Yokkaichi plant in Yokkaichi, Mie Prefecture, for production of the most advanced memory chips, in which the two companies have a partnership.
With the settlement, one of the obstacles for the planned sale of Toshiba Memory is removed. If the planned sale is approved by antimonopoly authorities, procedures for the sale will be completed, paving the way for Toshiba to take major steps forward for reconstructing its businesses.
According to the announcement, Western Digital approves of Toshiba’s sale of Toshiba Memory to a Japan-U.S.-South Korea consortium, led by Bain Capital of the United States, and will withdraw all pending litigation and arbitration actions, including a petition filed with the International Court of Arbitration to block the sale. Toshiba will also withdraw its case against Western Digital.
In addition to investing in the new facility at the Yokkaichi plant, Toshiba and Western Digital also agreed to extend a contract on the joint production up to 2029.
Yasuo Naruke, senior executive vice president of Toshiba and president of Toshiba Memory, released a statement, saying, “With the concerns about litigation and arbitration removed, we look forward to ... accelerating Toshiba Memory’s growth.”
Western Digital Chief Executive Officer Steve Milligan said during a conference call for investors, “This agreement is a win-win for all parties.”
Toshiba, having fallen into the situation of having liabilities in excess of assets due to huge losses incurred in the nuclear business in the United States, decided in January to sell the memory unit. Western Digital, however, opposed the planned sale, and filed in May an arbitration request with the international arbitration court against Toshiba, seeking to block the sale. As a countermeasure, Toshiba in June filed a lawsuit with the Tokyo District Court against Western Digital, seeking damage compensation.
In September, Toshiba decided to sell Toshiba Memory to the Japan-U.S.-South Korea consortium, with Western Digital not being a participant, for ¥2 trillion. The two firms’ confrontation thus became increasingly conspicuous.
But they began talks for a settlement in November. Because of fierce competition in the memory chip business, it is said to be necessary to make capital investments of several hundred billion yen every year.
To maintain Toshiba Memory’s competitiveness, it is considered better for Toshiba to jointly invest with Western Digital. The U.S. company, for its part, was seen to face a decline in international competitiveness unless it makes joint investments in the new plant facility project.
Not making such investments would leave Western Digital unable to receive supply of the next-generation memory chips.
- December 14, 2017
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