Western Digital files an auxiliary arbitration in a bid to block Toshiba’s prospective multi-billion-dollar chip sale

September 28, 2017

Western Digital, one of the largest computer hard disk drive manufacturers in the world, has announced that it intends to seek an injunction with the International Court of Arbitration to block the sale of Toshiba's semiconductor business. This has not been the San Jose-headquartered company’s first disputable brush with Toshiba, as the firm had already encountered a falling out with the Japanese multinational with regards to its chip business. The latest inquisition comes on the heels of the prospective sale of SanDisk, Toshiba’s renowned chip joint venture, which was supposed to be sold to a conjoint consortium co-owned by SH Hynix and Bain Capital. In consequence, Western Digital has now initiated legal proceedings against Toshiba, citing reasons that no deal regarding the chip business could possibly be commenced, negotiated, or closed without the Californian company’s legal consent.

For the uninitiated, Western Digital had acquired a stake in the computer storage devices market giant’s chip JV in 2016. Now, as Toshiba endeavors to sell a part of its chip unit to the Bain-Hynix association, in addition to investing in a new chip facility in Japan, Western Digital has been sweating bullets, as it views the chip business to be a major growth avenue and is overtly desperate to keep the business away from the likes of fellow rivals such as SH Hynix.

At this point of time, even a mammoth alliance would still not bring Toshiba the respite it needs, given that the firm needs to generate billions of dollars to cover its liabilities and scramble out of bankruptcy prior to the end of the fiscal year in March. This scenario pans out to be rather unlikely, since regulatory reviews regarding the deal could take more than six months to come through.

For the record, Toshiba’s deal, worth USD 18 billion, with the Bain Group and the South Korean magnate, SH Hynix, is still unsigned. The Japanese multinational has been assuring the banks that the deal has been awaiting the nod of Apple, Inc., which is apparently a key member of the consortium.

In response to Western Digital’s injunction, a panel of three arbitrators, in all likelihood, may be formed in the course of the current week, and a decision is plausible to come through by the end of this year. However, it has been proclaimed that a final decision may not be interposed before 2019. It is prudent to mention that Toshiba, so far has declined to make any kind of comment on the ongoing dispute.