Western Digital Corp. will not seek veto power in Toshiba Corp.'s chip unit — which it aims to jointly buy with other investors — in order to avoid lengthy antitrust scrutiny, sources said Tuesday.
Toshiba and Western Digital, which are partners in a flash memory venture, are close to reaching a deal over Toshiba's sale of its chip unit, Toshiba Memory Corp. The development comes after a bitter feud over whether the Japanese firm needs the U.S. partner's consent for the deal.
Western Digital, a joint investor in Toshiba's Yokkaichi flash memory plant in Mie Prefecture, is set to buy ¥150 billion ($1.3 billion) of the chip firm's convertible bonds. Western Digital's voting rights will be limited to roughly 15 percent when it converts the bonds, the sources said.
While the two companies plan to take the chip unit public in roughly three years, Western Digital's stake will still be limited to no more than one-third of all shares, even if the U.S. firm goes ahead with plans to buy additional shares, meaning it will not have veto power over management issues, the sources said.
Toshiba and Western Digital are still discussing when the U.S. firm will buy additional shares in the chip firm, the sources said.
Toshiba President Satoshi Tsunakawa and Western Digital Chief Executive Officer Steve Milligan held talks Monday and reached a broad agreement on the sale of Toshiba Memory.
Toshiba is expected to announce the agreement on Thursday.
Ties between the two companies had soured after Western Digital took Toshiba to court, claiming that the unit sale without its consent would breach their joint venture contract.
Western Digital, the government-backed Innovation Network Corp. of Japan, the Development Bank of Japan and U.S. fund Kohlberg Kravis Roberts & Co. is set to offer ¥1.9 trillion for Toshiba Memory.