Reports: Western Digital Resubmits Bid For Toshiba Chip Unit

(RTTNews) - Western Digital Corp. (WDC) and U.S. private equity firm KKR & Co. LP (KKR) have resubmitted an offer for Toshiba Corp.'s (TOSYY.PK, TOSBF.PK) flash memory chip unit, according to media reports on Tuesday. The new offer is said to be around 2 trillion yen.

Western Digital's re-submission of a bid comes amid speculation that Toshiba might sign an agreement by Wednesday to sell the business to a Japanese-led consortium despite stiff resistance from Western Digital.

Last Wednesday, Toshiba said it selected a consortium led by the state-backed Innovation Network Corp. of Japan as a preferred bidder. The Development Bank of Japan and U.S. firm Bain Capital will also invest in the memory unit, while South Korean chip-maker SK Hynix will provide lending.

Western Digital, which has a 49 percent stake in Toshiba's unit as part of a joint venture, has firmly opposed the sale of Toshiba Memory, arguing that any transfer of the business without its consent would violate joint venture agreements.

The company is also wary of any involvement by SK Hynix in a deal for the unit and has questioned SK Hynix's motives in lending.

Another point of contention is Western Digital's relatively low offer for the business. The company had earlier proposed paying around 1.7 trillion yen to 1.8 trillion yen, including contributions from partners such as investment funds, while some bids through the auction process have topped 2 trillion yen.

The U.S. hard-drive maker is seeking a U.S. court injunction to block any deal without its consent, and has been pursuing one-on-one negotiations. A hearing is scheduled for July 14.

However, Toshiba needs to sell the unit before the year ends in March 2018 so that it can use the proceeds to rebuild its finances after an accounting scandal and cost overruns at its bankrupt Westinghouse nuclear unit. The company would prefer that its partner limit itself to a minority interest to avoid a lengthy antitrust review.

Toshiba has set itself a self-imposed deadline of Wednesday, the day of the company's annual shareholder meeting, to sign a definitive agreement for sale of the unit.