Toshiba chip unit bidder Western Digital expected to use refusal right to block investment from Micron, SK Hynix - report
Western Digital Corp [NASDAQ: WDC], one of the bidders for Toshiba Corp's [TYO: 6502] memory-chip subsidiary, is likely to say no to investments from rivals Micron Technology Inc [NASDAQ: MU] or SK Hynix Inc [KRX: 000660] in the new unit, the Diamond Weekly reported.
If Toshiba chooses these companies as buyers of stakes in the to-be-formed chip subsidiary, Western Digital is expected to exercise the first right of refusal, which it holds through an alliance accord with Toshiba on flash memory chip production, the Japanese weekly magazine reported, citing an unidentified official from the US company.
The unit is to be formed on 1 April via a spin-off of Toshiba's flash memory-chip business.
Between 2002 and 2016, Western Digital had spent a total of JPY 1.2tn (USD 10.52bn) on the flash memory chip-making factory in Yokkaichi, Mie Prefecture, jointly operated by the two companies, according to the report.
The Yokkaichi plant operations will be problematic if a rival to Western Digital joins, the report said, citing the source.
Meanwhile, Toshiba is reluctant to sell the chip unit stake to Western Digital, partly because the US chip maker is a direct competitor, and also because it may take longer than expected time to gain regulatory approvals, the magazine report said, citing an unidentified Toshiba executive.
Other bidders Apple Inc [NASDAQ: AAPL] and Hon Hai Precision Industry Co Ltd [TPE: 2317] do not appear seriously ready to make a huge investments in the memory-chip business, the Toshiba executive was quoted as saying in the report.
That automatically leaves investment funds as the only potential acquirers left, the report added, citing the executive.