Toshiba launches 835m lawsuit against Western Digital over sale of chip business

Troubled Japanese conglomerate Toshiba has launched a lawsuit against Western Digital over claims it interfered in attempts to sell the memory chip unit they jointly own.

Toshiba is seeking damages of around 120bn yen (£835m) and accusing Western of “continually interfering with the bid process” as it looks to offload the business to raise much-needed cash.

US-based Western, which jointly runs Toshiba’s main semiconductor plant, has been resisting the sale of the chip arm to an interested group of investors.

Toshiba is hoping the sale will cover losses from its nuclear division. The sprawling Japanese conglomerate has warned that it could struggle to stay in business and last week lost its top-tier listing on the Tokyo Stock Exchange after revealing that its losses overwhelmed the value of the company.

Western has said Toshiba should negotiate exclusively with it before any sale, and has warned that a sale may be a violation of their contract.

Toshiba has now said that Western, which has a 49pc stake in the chip unit, has “exaggerated” the amount of say it has in the sale of the business.

The lawsuit, which was launched just one hour after Toshiba's annual shareholder meeting on Wednesday, looks to prevent Western from claiming it needs to provide consent for the sale.

It also seeks damages over claims that Western employees obtained confidential information through the joint venture.

The Japanese giant had hoped to complete the sale to the group of South Korean, US and Japanese investors in a deal worth around £14bn by the time of its AGM. It has been unable to do so, although it said negotiations were ongoing with the preferred bidder.

Western, which has resubmitted its bid for the unit, warned in a letter to Toshiba that it would not consent to the deal with the proposed group of investors because of fears South Korean rival SK Hynix would benefit from the technology.

 It has been given until August to file the reports due to ongoing bankruptcy proceedings involving its Westinghouse nuclear reactor business in the US.

Escalating costs at two Westinghouse projects have caused a $6.3bn (£4.9bn) writedown, and raised fears that the UK’s Moorside project, which will built by Toshiba using a Westinghouse reactor, could be derailed.

Source: The Telegraph

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