Toshiba, Western Digital To Settle Dispute Over Toshiba's Memory-chip Unit Sale

(RTTNews) - Japanese conglomerate Toshiba Corp. (TOSYY.PK, TOSBF.PK) and Western Digital Corp. (WDC) agreed to settle a dispute over Toshiba's planned sale of its memory-chip unit, the companies said, clearing a major hurdle to about $18 billion deal.

The announcement is a big step forward for Toshiba, which is looking to the chip unit sale to make up for losses at its U.S. nuclear affiliate, Westinghouse Electric Co., after Westinghouse filed for bankruptcy protection in March. Western Digital, which last year acquired Toshiba's longtime chip-unit partner SanDisk, had maintained that the sale couldn't go through without its approval.

As part of the global settlement agreement, Toshiba, Western Digital have agreed to withdraw all pending litigation and arbitration actions.

Yasuo Naruke, Senior Executive Vice President of Toshiba Corporation and President and CEO of TMC said,".... With the concerns about litigation and arbitration removed, we look forward to renewing our collaboration with Western Digital, and accelerating TMC's growth to meet growing global demand for flash memory. Toshiba also remains on track to complete our transaction with the consortium led by Bain Capital by the end of March 2018."

As part of this agreement, Toshiba Memory Corporation or TMC and Western Digital will participate jointly in future rounds of investment in Fab 6, the state-of-the-art memory fabrication facility now under construction at Yokkaichi, including the upcoming investment round announced by Toshiba in October 2017.

Fab 6 will be entirely devoted to the mass production of BiCS FLASH™, the next-generation of 3D flash memory, starting next year. TMC and Western Digital similarly intend to enter into definitive agreements in due course under which Western Digital will participate in the new flash wafer fabrication facility which will be constructed in Iwate, Japan.

The parties will strengthen their flash memory collaboration by extending the terms of their joint ventures. Flash Alliance will be extended to December 31, 2029 and Flash Forward to December 31, 2027. Flash Partners was previously extended to December 31, 2029.

The parties' agreement to resolve all outstanding disputes ensures that all parties are aligned on Toshiba's sale of TMC to K.K. Pangea, a special purpose acquisition company formed and controlled by a consortium led by Bain Capital Private Equity, LP. The parties have agreed on mutual protections for their assets and confidential information in connection with the sale of TMC, and on collaborating to ensure the future success of TMC as a public company following an eventual IPO.