Toshiba Sues to Propel Sale -- WSJ
2017年6月29日 - 04:02PM
Dow Jones News
Western Digital stands in the way of the group's effort to
unload chip business
By Takashi Mochizuki
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the US print
edition of The Wall Street Journal (June 29, 2017).
TOKYO -- Toshiba Corp.'s future turned even murkier as it filed
suit to stop a business partner from blocking the sale of its
semiconductor business, meant to plug a gaping financial hole.
The struggling conglomerate is racing to raise about $20 billion
from the sale to a Japanese-government-led consortium -- against
the opposition of Western Digital Corp., which has a stake in the
business. Toshiba had aimed to announce a deal by Wednesday with
the consortium, which includes South Korean chip maker SK Hynix
Inc., a Western Digital competitor.
Instead of announcing the deal agreement, Toshiba asked the
Tokyo District Court to suspend a legal motion filed by Western
Digital to halt the sale, and to award it Yen120 billion ($1.06
billion) in damages. Western Digital, which argues that its
joint-venture contract with Toshiba gives it veto power over any
sale, had filed the motion with a state court in California earlier
this month.
Western Digital submitted a new proposal to buy the operation
itself on Tuesday, with U.S.-based private-equity firm KKR &
Co.
A deal is critical for Toshiba because it has negative
shareholder equity of Yen581.6 billion following the chapter 11
bankruptcy filing by its Westinghouse Electric Co. subsidiary. The
conglomerate will be removed from the Tokyo Stock Exchange if it
fails to fix its financial standing by next March.
Some analysts said Toshiba's legal action could backfire by
prolonging the dispute and slowing the sale. It might have been
quicker to seek a settlement, they say.
"This means a war which Toshiba looks likely to lose," said Amir
Anvarzadeh, head of Japanese equity sales at BGC Partners, a
brokerage. "Toshiba is running out of time."
At a shareholders meeting Wednesday, Toshiba Chief Executive
Officer Satoshi Tsunakawa said that Western Digital is
"unreasonably interfering." A Western Digital spokeswoman declined
to comment.
Toshiba had initially aimed to pick a buyer for the chip unit by
March. After postponing a decision several times it missed its
latest self-imposed deadline: the shareholders meeting. Toshiba
executives apologized at the meeting for the delay, and said they
would confirm a sale as soon as possible. They didn't name a new
target date.
Taiwan's Foxconn Technology Group and Broadcom Ltd. of the U.S.
were among other bidders for Toshiba's NAND flash-memory operation,
enjoying a boom thanks to demand for the memory for smartphones and
computer servers.
But Toshiba selected as its preferred bidder a group led by
state-backed fund Innovation Network Corp. of Japan and 100%
government-owned Development Bank of Japan, joined by U.S.
private-equity firm Bain Capital and SK Hynix. It called the
group's proposal the best "not only in terms of valuation, but also
in respect to certainty of closing, retention of employees, and
maintenance of sensitive technology within Japan."
The selection of a Japanese-government-led group angered some,
including Terry Gou, chairman of iPhone assembler Foxconn, formally
known as Hon Hai Precision Industry Co. Hiroshige Seko, Japan's
economy minister, said the administration hadn't intervened.
Western Digital made several proposals to buy the operation,
including one to join the government-led group. Toshiba's Mr.
Tsunakawa said it didn't pick the U.S. partner because Western
Digital hadn't participated in the formal bid process.
Analysts say that unless Toshiba can reach a settlement with
Western Digital, the U.S. company is likely to employ every
possible step to slow the deal process.
"If a consortium with the Japanese government was a must,
Toshiba should have made more effort to pull in Western Digital,
not its competitor SK Hynix," Waseda Business School professor
Atsushi Osanai said.
The Toshiba-Western Digital relationship now looks irretrievably
broken. Toshiba said that in addition to filing suit, it had cut
off Western Digital's access to their joint-venture database to
protect Toshiba's intellectual property.
Analysts say the only winner from the dispute is Samsung
Electric Co., which holds top share in the NAND flash-memory
market, according to IHS Markit. As the legal battle between
Toshiba and Western Digital drags on and makes business planning
harder, Samsung has the opportunity to boost chip investment and
bolster its advantage.
Write to Takashi Mochizuki at takashi.mochizuki@wsj.com
(END) Dow Jones Newswires
June 29, 2017 02:47 ET (06:47 GMT)
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