Toshiba doubles down in legal stoush with Western Digital

Toshiba doubles down in legal stoush with Western Digital

The Japanese tech company accuses WD of allegedly threatening bidders for its memory chip business

Toshiba has taken to the Superior Court of California in a bid to keep Western Digital from blocking the sale of its memory chip business to a consortium of buyers. 

Toshiba announced its opposition on 4 July to a motion for preliminary injunctive relief brought by SanDisk, a subsidiary of Western Digital, which had been publicly filed with the court.

The US-headquartered storage technology company acquired SanDisk, which has been a long-term memory chip manufacturing partner of Toshiba, last year.

However, after Toshiba moved to put its flash memory business stake up for sale earlier this year in a bid to cover massive losses incurred by its Westinghouse Electric Company subsidiary, Western Digital dug its heels in, seeking arbitration over the proposed sale.

Now, Toshiba is fighting back.

“As has been widely reported in the press, due to unanticipated financial pressures, Toshiba has spun off its Japanese memory business – but not the “interests” at issue in this case – and is attempting to sell that business,” the Japanese tech company said in its court filing.

Toshiba said that while Western Digital was originally a bidder for the business, it is so highly leveraged that it “cannot afford to pay fair value for the business”.

“Quickly outbid, it commenced an extensive effort to discourage bidders and force Toshiba to sell its entire memory business to Western Digital at a bargain price,” Toshiba said.

“Western Digital has threatened bidders and buyers directly, it has threatened banks that may be interested in providing financing, it has filed a meritless arbitration hoping to delay the sale and increase Toshiba’s financial distress, and now it has filed this litigation in the United States in a further effort to block the planned sale,” it said.

Toshiba told the court that there are “many reasons” why it should reject Western Digital’s effort to block the sale, citing false claims of urgency, lack of jurisdiction, the danger of “irreparable injury” to Toshiba and lack of substance to Western Digital’s claim.

The hearing on the preliminary injunction motion is currently scheduled for July 14, before the Superior Court of California, County of San Francisco.

The filing comes just days after Toshiba revealed it had moved to sue Western Digital to the tune of $1.4 billion over its alleged continued interference with sale process of the company’s memory business.

Toshiba told shareholders on 28 June that it had filed a petition with the Tokyo District Court against Western Digital, seeking a provisional disposition order for an injunction against acts of unfair competition.

The embattled Japanese tech giant also revealed it had brought a suit for a permanent injunction against Western Digital, along with a claim for damages and payment of 120 billion yen ($1.4 billion), alleging violation of the Unfair Competition Prevention Act, among other things.

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