Toshiba's memory division sale suffers another delay

Xavier Trudeau
Juillet 17, 2017

A judge for the Superior Court of California [official website] postponed a decision Friday for injunctive relief to block Toshiba Corporation [official website] from selling its flash memory business in an attempt to relieve losses from the nuclear reactor business.

The chip-making unit of Korea's third-largest conglomerate SK was initially known to be merely taking the role as a lender for Bain Capital but it later demanded that it receive a voting stake in the Toshiba's flash memory unit. Some cautiously say the situation would be disadvantageous for the Korea-US-Japan alliance, while the sale is continuously challenged by WDC, Toshiba's long-term memory partner. The worldwide alliance had been scheduled to sign a definitive contract before Toshiba's shareholder's meeting on June 28, but it could take one more month under the current situation. The Superior Court of California suggested the companies work on a proposal for providing Western Digital with two weeks' advance notice of the sale and did not rule on the United States company's injunction request. Some analysts say SK Hynix could be replaced by WDC.

Following Toshiba's pick of the preferred bidder, the U.S. chipmaker sued Japanese partner with a San Francisco court, asking the court to order an injunction to stop the current sale of the flash memory unit and a temporary restraining order forcing Toshiba to give its workers access to shared databases.

The two companies were in court in the USA on Friday for a hearing on Western Digital's request for a preliminary injunction to block the sale.

Shiga noted that a voting stake for SK Hynix was not included in the consortium's framework when INCJ won approval to participate, according to Japan's JiJi Press on Saturday. "We can not confirm anything about the report", an SK Hynix representative said.

Separately from the California lawsuit, Western Digital is also contesting its consent rights in an worldwide arbitration tribunal. It was possible that the lawsuit filed by Western Digital to stop the sale could have some effect on the timing, he said.

The suspicions peaked on Sunday as a Japanese news agency reported SK hynix gave up on its acquisition of a stake guaranteeing a voting right for Toshiba, which was strongly denied by sources familiar with the matter.

The already hazy direction of the sale of Toshiba's memory chip business became more unclear as the Innovation Network Corp. of Japan, a leader of the consortium that was named the preferred bidder in the deal, threatened SK Hynix, one of the consortium members, to give up its voting stake in the Japanese company last Friday.

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