Toshiba and Western Digital Settle Fight Over Chip Unit Sale

Toshiba and Western Digital Settle Fight Over Chip Unit Sale
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It is now official - Toshiba and Western Digital ended legal spat that had threatened to derail the $18 billion sale of Toshiba’s flash-memory business and cut the U.S. company off from a future supply of vital new products, according to Bloomberg.

Western Digital is dropping arbitration claims in the U.S. that were aimed at stopping the sale to a consortium led by Bain Capital. In return, the Japanese company will end its legal claims against Western Digital, the two companies said in a statement. WDC will be able to invest alongside Toshiba in two new chip plants in Japan and receive a guaranteed supply of memory chips, they said.

“As we at some point in the process moved down the litigation path, that was not our preferred path, that was not what we wanted to do,“ Steve Milligan, WDC's CEO, said in a conference call. “We’re very pleased to be able to resolve this and put it behind us.“

Under the settlement terms, Western Digital will get extensions of its existing joint ventures and will resume sharing the bill for equipment used in the Japanese plants, providing access to technology that’s the future of its business. It will get output from the new Fab 6 from the second half of next year. In the conference call, Western Digital said it now sees adjusted earnings per share of $3.80 in the fiscal second quarter, compared with an earlier forecast of $3.60 to $3.70.