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Western Digital to seek injunction to block Toshiba's $18 bln chip unit sale

From Reuters - September 26, 2017

TOKYO (Reuters) - Western Digital Corp (WDC.O) said on Tuesday it will seek an injunction to block the sale of Toshiba Corps (6502.T) prized semiconductor business to a rival group, upping the ante in anacrimonious battle with its chip venture partner.

The latest legal action by the U.S. firm, which jointly invests in Toshibas main chip plant, comes in the wake of the Japanese conglomerates decision last week to sell the semiconductor unit to a consortium led by Bain Capital LP.

The $18 billion agreement with the Bain group is, however, still unsigned, with Toshiba telling its main banks this week that Apple Inc (AAPL.O), a member of the consortium and an important client, had yet to agree to key terms.

Western Digitals injunction is being sought with the International Court of Arbitration, where the California-based company, which argues no deal can be done without its consent, initiated proceedings against its partner earlier this year.

A panel of three arbitrators may be formed as early as this week and a decision on the injunction could come late this year, which would be before any deal is finalised, a source familiar with the matter said, declining to be identified due to the sensitivity of the mattter. A final ruling on the dispute is not expected before 2019.

The highly contentious auction process underscores how high the stakes are as rival suitors, the Japanese government and Toshibas creditor banks all squabble over the worlds second biggest producer of NAND memory chips.

For Toshiba, a signed deal would come not a moment too soon as it needs to raise billions of dollars to cover liabilitiesarising from its now bankrupt U.S. nuclear unit Westinghouse before the end of the financial year in March. If it fails to do that, it could be delisted.

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