Toshiba Settles the Hurdles Standing on its Way of Selling its Microchip Subsidiary

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Toshiba has difficulties in the past that hindered it from selling its microchip subsidiary. Just recently, the company was able to clear the hurdle and hence moved away from its financial brink. The announcement on the settling of the fight between Toshiba and Western Digital was made on Wednesday. Western Digital is an American data storage company and has issued threats of blocking the Toshiba’s microchip deal. With the fight settled, the Japanese conglomerate is expecting to get about $14 billion from the sale. The cash is so much needed since the company has been facing financial difficulties after it incurred high losses in the nuclear power projects in the United States. Both Toshiba and Western Digital announced to have agreed on withdrawing lawsuits as well as negotiation claims on deals that each of the company had filed against each other. In the agreement, Toshiba agreed to give up a majority stake in the chip subsidiary to several investors including an investment firm known as Bain Capital.

In a statement released by the executive vice president of Toshiba Yasuo Naruke, the company is looking forward to rekindling its partnership with Western Digital, given that the litigation concerns are settled. He also said that his company aims at continuing with its intention of bringing its transactions to a completion, with the close fellowship with Bain Capital. In September, Toshiba agreed to a deal of selling 60 percent of the microchip unit known as Toshiba Memory Corporation to a group led by Bain. The team is made up of companies such as Apple, which rely on Toshiba’s NAND flash memory chip to make products. In March this year, Toshiba’s American nuclear subsidiary known as Westinghouse Electric requested for a bankruptcy protection following delays and overturns that saw Toshiba losing $6 billion.

Western Digital controls some shares of Toshiba’s flash memory production in Japan through SanDisk, its subsidiary. It had also applied to bid Toshiba Memory Corporation but lost. Since Toshiba needed its approval to make the sale of the microchip, Western digital opted to press charges. Toshiba counter sued it for allegedly wrongful interference. To sustain its case, Toshiba had to part with $5.3. The sale should have been completed by March but was delayed because of some antitrust regulations in several countries. The Wednesday agreement stated that Western Digital and Toshiba would sustain their business arrangement until 2029. Western Digital was allowed to invest in capacity expansion in Japan.

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