Published: Thu, December 14, 2017
Medicine | By Daryl Nelson

Toshiba settles with Western Digital, clearing path for Bain-Apple acquisition

Toshiba settles with Western Digital, clearing path for Bain-Apple acquisition

Western Digital confirmed reports earlier in the day of a settlement with a filing Tuesday afternoon that breaks down the revised agreement for new manufacturing facilities.

The agreement allows Western Digital to participate in future investments in their joint venture, clearing the way for a consortium led by Bain Capital to buy Toshiba Memory Corp (TMC), the companies said yesterday. Citing rights stemming from these partnerships, Western Digital claimed that Toshiba needed their consent before Toshiba could spin off and sell their side of the partnerships. It may have to clear further hurdles, such as possible anti-trust concerns.

Toshiba agreed in late September to sell Toshiba Memory, the world´s second-biggest producer of NAND chips, to a consortium led by Bain Capital LP for $18 billion to cover billions of dollars in liabilities arising from Toshiba´s now bankrupt US nuclear power unit Westinghouse.

The struggling Japanese conglomerate said Wednesday that it had settled a legal dispute with Western Digital, the USA data storage company, that threatened to block the microchip deal. As a countermeasure, Toshiba in June filed a lawsuit with the Tokyo District Court against Western Digital, seeking damage compensation.

Argyle is inviting the 30-plus overseas investors who participated in Toshiba´s new share issue to team up in opposition to the deal although it remains to be seen just how much traction it will gain.

The sale of Toshiba Memory Corporation (TMC) to the Bain Capital-led consortium called K.K. Pangea is set to proceed after Toshiba, TMC, and Western Digital came to terms, it was announced on Wednesday.

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Toshiba settles with Western Digital, clearing path for Bain-Apple acquisition

Toshiba signed a deal in September, after months of tumultuous negotiations, to sell 60 percent of Toshiba Memory Corp.to the Bain-led group, whose members also include Apple and other technology companies that rely Toshiba's NAND flash memory chips to make their products.

Toshiba is inundated with losses related to its United States nuclear operations at Westinghouse Electric Co, which filed for bankruptcy earlier this year. "In addition, we have put in place equity transfer restrictions" on Toshiba Memory, he added.

Neither Toshiba nor Bain took part in the conference call with Western Digital executives, but both released statements confirming the agreement.

Western Digital said it expects revenue for the December quarter of $5.3 billion, above analyst estimates for $5.28 billion, and adjusted earnings of $3.80 per share, vs. forecasts of $3.67.

To maintain Toshiba Memory's competitiveness, it is considered better for Toshiba to jointly invest with Western Digital.

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