Western Digital says resubmitted bid with KKR for Toshiba’s chip unit

Western Digital says resubmitted bid with KKR for Toshiba’s chip unit

Western Digital said it will not agree to a sale of the memory chip unit if the preferred bidding consortium includes rival chipmaker SK Hynix Inc.

The letter comes after Toshiba CEO Satoshi Tsunakawa said on Friday it was open to talks with Western Digital, although it was not planning to make the first move.

For several months, Western Digital has argued that Toshiba can not sell its memory business to a third party without permission because the segment includes joint ventures with Western Digital’s subsidiary, Sandisk. The company, better known for manufacturing conventional hard-disk drives, acquired the 50 per cent stake in the business when it acquired SanDisk for $19bn previous year. On Sunday, Western Digital Chief Executive Stephen Milligan sent a letter to Toshiba expressing concerns that SK Hynix will gain access to proprietary information about Western Digital’s technology through its joint ventures with Toshiba.

The alliance’s bid for Toshiba’s coveted flash-memory business is reportedly worth more than 2 trillion yen ($18 billion), the Nikkei said without citing sources.

WD objects to the presence in the consortium of Hynix.

Toshiba is seeking to sign a definitive agreement with its preferred bidder – a group led by the Japanese government and including USA private equity firm Bain Capital – by Wednesday, the day of its annual shareholders meeting.

Toshiba Memory Corp is being sold by the company to plug a financial black hole caused by the Chapter 11 bankruptcy protection filing of U.S. nuclear power station builder Westinghouse.

According to a report by Bloomberg, some of Toshiba’s potential investors are taking time to conduct their due diligence in the semiconductor sale, partly because of Western Digital’s claims.

Terry Gou, the founder and CEO of Foxconn, revealed last week that Apple, Dell and Kingston had joined its consortium, and suggested that Amazon, Google-owner Alphabet, Microsoft and Cisco could also be included.

Western Digital shares are up 2.36% premarket.

Toshiba announced last Wednesday the selection of a consortium led by the state-backed Innovation Network Corp. of Japan as a preferred bidder. But Japan’s Ministry of Economy, Trade and Industry, which oversees the INCJ, supports its current consortium.