‘Toshiba sells its nand memory division to Western Digital’ – update

Toshiba is said to have taken the plunge and decided to sell the nand memory division to a consortium led by a Japanese government fund. Western Digital is also part of this consortium.

The Japanese business newspaper Nikkon Kogyo reports this, without citing further sources. Toshiba is likely to make the news official on Wednesday, after a final board meeting took place. The acquisition would involve a total of more than 15 billion euros. The deal must be completed before March 2018, otherwise Toshiba could face high financial costs, which could eventually lead to a departure from the Japanese stock exchange in Tokyo.

Western Digital would not invest in the acquisition of the nand memory division, but would like to acquire 15 percent or more of the voting rights. Toshiba has previously indicated that it wants this part to remain independent. A week ago, it was already said that Western Digital might want to withdraw from the takeover bid. This should have accelerated the takeover. In return, Western Digital wants a stronger position in the current joint venture between Western Digital’s subsidiary SanDisk and Toshiba.

If the consortium actually takes over the nand memory division, Apple will be trumped among others. The Cupertino company would have offered around 15.1 billion euros together with SK Hynix. In addition to Western Digital, the consortium includes a Japanese government fund and the Japanese development bank. The Japanese government is a major shareholder of the government fund, and hopes with the acquisition to keep production in Japan, partly in view of the strategic value of chip production for future Japanese technology.

The acquisition is somewhat noteworthy, as Toshiba and Western Digital have been equally embroiled in a legal battle over the acquisition of the memory division, with the companies blaming each other. In June, Toshiba sued WD for frustrating the division’s sale and alleged unfair competition. Toshiba claimed compensation of the equivalent of 942 million euros. Earlier, WD went to an arbitration committee to prevent Toshiba from selling the chip division.

Toshiba spun off its nand memory production on April 1 into a separate company called Toshiba Memory and is selling this part because it is in financial trouble after a series of setbacks at Toshiba’s US nuclear unit Westinghouse. After Samsung, Toshiba is currently the world’s largest manufacturer of nand memory.

Update, 1:50 PM: According to Reuters, Toshiba would now favor another group of acquisition candidates, namely a group led by Bain Capital and SK Hynix. This would be the case, as Toshiba wouldn’t work it out with Western Digital. Reuters reports this citing two anonymous sources involved in the talks and negotiations.