Toshiba Corp (TOSBF) and business partner Western Digital Corp (WDC) have agree d in principle to settle a dispute over the embattled Japanese conglomerate’s plans to sell its $18 billion chip unit, sources with direct knowledge of the talks said.
Toshiba‘s board has approved a framework for a settle ment and is aiming to reach a final agree ment by next week, one of the sources said.
The potential for Western Digital – Toshiba‘s partner in its main semiconductor plant and jilted suitor in the long and contentious auction of the unit – to block a deal has been seen as the main obstacle to the planned sale to a consortium led by Bain Capital LP.
The settle ment under discussion calls for Western Digital to drop arbitration claims seeking to stop the sale in exchange for allowing it to invest in a new production line for advanced flash memory chip s that is slated to start next year, two sources said.
The sources declined to identified as they were not authorized to speak to the media.
A Toshiba spokesman said that while the company was open to a settle ment, it would not disclose discussion specifics or details of board of directors meetings. “It is not a fact that we have reached an agree ment with Western Digital,” he said.
Western Digital declined to comment.
Toshiba was forced to put the unit – the world’s no. 2 producer of NAND chip s – on the block to cover billions of dollars in liabilities arising from its now-bankrupt U.S. Nuclear power unit Westinghouse.
The deal with the Bain-led consortium will, however, see it reinvest in the unit and together with Hoya Corp, a maker of parts for chip devices, Japanese firms will hold more than 50 percent of the business – a priority of the Japanese government.
