Toshiba Corp.'s plans for selling its memory chip business to raise much-needed cash hit a snag as joint-venture partner Western Digital Corp. said the sale may violate the companies' contract.
Western Digital Chief Executive Officer Steve Milligan wrote a letter to Toshiba's board members on Sunday advising them that they should negotiate exclusively with his company before any sale. He also argued that the rumored bidders were unsuitable and the reported prices offered were above the fair and supportable value of the chip business, according to a person familiar with the process. Toshiba and Western Digital are joint owners of certain chip business facilities.
Western Digital's contentions may add another roadblock to the troubled process of finding a buyer for Toshiba's chip unit. The Japanese company needs cash to help shore up finances hurt by losses from its Westinghouse nuclear business in the U.S. and has warned that its very survival is at risk. Analysts cautioned that Western Digital does have legal rights that will bear on the sale process.