Western Digital Corp has sought a court injunction to prevent Toshiba Corp from selling its chip business without its consent - a move that threatens to throw the fiercely contested auction into disarray. As Laura Frykberg reports, the news sent Toshiba shares down another six percent.
Toshiba's been offered top dollar for its U.S. chip business... it could even achieve the asking price of 18 billion dollars. But legal action by it's U.S. partner Western Digital - could see that figure fall... preventing the Japanese company raising the funds it needs to recover from a bad nuclear investment in the US. (SOUNDBITE) (English) CHIEF INVESTMENT OFFICER, CCLA INVESTMENT MANAGEMENT, JAMES BEVAN, SAYING: "This is a company that courtesy of its Westinghouse nuclear legacy business is in a real mess. And it does have to resolve the situation quickly. It has to get the cash in otherwise it indeed risks being delisted." Western Digital is seeking a court injunction... Saying selling the world's second largest producer of NAND semi-conducters without its consent violates contractual rights. It wants to buy the business itself - but for less money. (SOUNDBITE) (English) CHIEF INVESTMENT OFFICER, CCLA INVESTMENT MANAGEMENT, JAMES BEVAN, SAYING: "That would be a haircut in terms of value but maybe that is the price that they will have to pay for getting the deal done. " Toshiba's says it's proceeding with its preferred bidder as planned and hopes to have a sale agreement by the end of the month. It certainly doesn't have time for a long legal battle. It's in negative shareholders' equity and that could lead to a delisting.