WESTERN DIGITAL is to seek an injunction in a bid to prevent Toshiba from selling its semiconductor unit.
The move comes just days after Western Digital raised its offer for Toshiba's chip business, which is part-financed by Innovation Network Corporation of Japan. That bid, though, still fell short of what is believed to be the highest offer from a consortium led by Taiwanese contract manufacturer Foxconn.
Toshiba had been expected to name its preferred bidder today.
Western Digital and Toshiba share 50-50 ownership of a highly regarded NAND flash factory in Japan, via three joint venture agreements, with WD's stake previously having been held by SanDisk, which it acquired for $19bn last year.
WD claims that Toshiba is barred by the terms of the joint venture agreement from transferring the stake held by Toshiba Memory Corp to a third party without its consent.
But with the company's chances of winning the auction receding, Western Digital has reverted to the hard-ball legal tactics it tried earlier in the year in a bid to wrest control of Toshiba Memory Corp without having to win the auction.
"Toshiba Corporation's attempts to circumvent our contractual rights have left us with no choice but to take this action. It is our concern that, left unchecked, Toshiba would pursue a course that clearly violates these rights and also runs decidedly counter to the best interests of the joint venture and also to the hard working people at Toshiba Corporation's NAND flash business in Japan," claimed Western Digital CEO Steve Milligan in a statement issued late on Wednesday.
"The anti-transfer provisions of the relevant agreements between Toshiba and SanDisk, which govern their NAND flash memory joint ventures, are unambiguous and explicitly require that Toshiba obtain SanDisk's consent prior to any transfer of joint venture interests. Toshiba has acknowledged and validated SanDisk's consent rights on multiple occasions in the past."
Toshiba, for its part, claims that the agreements were never properly updated to validate SanDisk's change of ownership.
WD's statement went on to accuse Toshiba of trying "to invent ways to circumvent Western Digital's bargained-for consent rights" and "likewise continued to obstruct all of Western Digital's efforts to achieve an amicable resolution".
"As a result, we have been left with no choice but to take further steps to ensure that Toshiba does not unilaterally pursue a course of action that violates our clear contractual rights - one that would also be to the detriment of the joint venture and Japan at large," it concluded.
The statement added that WD had filed in May to take Toshiba to the International Court of Arbitration over the divestiture of Toshiba Memory Corp, and would file its injunction in the Superior Court of California, County of San Francisco.
However, at the time of writing, the injunction would not appear to have been filed. µ
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