A California court has told Toshiba not to transfer its flash memory joint venture interests to anyone else without advance notice to WDC subsidiary SanDisk, so that the issue is preserved for arbitration.
Toshiba is trying to sell its NAND memory business, which owns three individual joint venture (JV) interests with SanDisk in a NAND fabrication foundry in Japan. Its selling auction had settled on a preferred bidding group of two Japanese state-backed financial institutions, Bain and SK Hynix over competing bids, including one from WDC.
Stephen Milligan, WDC CEO, put out a quote saying: "We are grateful for today's directive by the Court, which is a victory for Western Digital, SanDisk and our stakeholders. Our entire goal was to preserve and protect our rights through the binding arbitration process, and that's precisely what the Court has done today."
WDC won a court action preventing Toshiba denying it access to JV facilities and databases last week.
Stifel analyst and MD Aaron Rakers said the court judge "ordered that Toshiba and Western Digital draft an agreement that stipulates that Toshiba would provide Western Digital with a two-week (or agreed upon period) notice prior to any transfer of JV interests." A further court hearing in this convoluted saga is scheduled for July 28.
It would seem that WDC wants to confine Toshiba inside a legal cage forcing it to negotiate selling its JV interests directly to WDC and its allies in a bidding group. WDC is set against any sale of Toshiba's JV interests to any consortium including SK Hynix because of that company's involvement with past trade secret thefts and its status as a flash chip competitor.
Toshiba obviously would rather not sell its interests to WDC, possibly hoping for more, desperately needed money from a competing bid. Finding itself squeezed in a WDC-influenced legal vice could bring Toshiba to a tipping point where it has no other option but to sell to WDC.
If that happens, WDC will have propelled itself pretty much to the top of the flash fab tree in less than two years after buying SanDisk, which would be a phenomenal feat. ®