Toshiba must allow Western Digital access to joint-venture assets
Tear down the wall, Tosh, says Cali Court
Western Digital Corp has notched up another win in its attempt to force Toshiba to talk turkey about selling its Memory Business to WD, or a bid group with its JV partner in it.
Like Gulliver being held down by myriad silken threads, mighty Toshiba is currently being hampered by yet another WDC legal action.
The Superior Court of California for the County of San Francisco granted motion for preliminary injunctive relief made by WD subsidiary SanDisk, allowing it access to certain information stored on databases owned by Tosh.
Toshiba is trying to sell its Memory Business to raise vitally needed recapitalisation cash after company-busting nuclear power station building projects in the States went titsup. The Memory Business owns Toshiba’s interest in a group of flash foundry joint-ventures with WDC. Tosh says it can sell its JV interests without WDC’s say-so. WDC says that's not so.
The struggle has been going on for a while. first, Toshiba denied access to the JV’s databases and assets. WDC sued, won a temporary restraining order against this walling off of the assets, which Toshiba then tried to have set aside, and has now had that temporary order solidified by the San Francisco County Superior Court.
WDC said: “We remain in constructive dialogue with Toshiba and its stakeholders, and continue to seek a solution that is in the best interest of all parties.”
Toshiba said: “While we are aware of the judge’s ruling today, we do not expect any of the current ongoing litigation with Western Digital and SanDisk to limit us in proceeding with our business plans.”
The legal fight has meant that Tosh’s talks with a preferred bidding group, which included Bain Capital but not WDC, have hit an impasse. Toshiba wanted cash from Bain before its legal dispute with WDC was sorted out. Bain wanted to pay after the legal fight was over, which is likely later than Toshiba needs the cash to avoid Tokyo Stock Exchange delisting.
As a consequence Toshiba has re-opened talks with Foxconn and, separately, WDC. There are horrendous great wads of cash involved, potential time-gulping regulatory issues, and a deadline in 2018 to avoid the delisting. Toshiba needs more cash than WDC, still paying off its SanDisk acquisition, can likely afford and the corporate brinkmanship battle continues. ®