• Kyodo

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Western Digital Corp. said Tuesday it will seek an interim injunction to prevent Toshiba Corp. from selling its chip unit to a Japan-U.S.-South Korea consortium.

The suit to be filed with the International Court of Arbitration is the latest salvo in the companies’ bitter legal battle. If Western Digital’s request is accepted, the sale could be suspended.

Toshiba is racing against the clock to sell Toshiba Memory Corp. to cover massive losses stemming from its now-bankrupt U.S. nuclear unit Westinghouse Electric Co. by the end of next March. If it fails to eliminate its negative net worth, the Japanese firm will be delisted from the Tokyo Stock Exchange.

Last week, Toshiba said it had chosen a consortium led by U.S. investment fund Bain Capital over a Western Digital group following a prolonged sale process that went through twists and turns until the very last minute.

As Toshiba has shown no willingness to resolve a number of legal disputes in a constructive manner, “we intend to continue our successful legal efforts into the binding arbitration process,” Western Digital said in a statement released Tuesday.

Western Digital, which jointly invests in Toshiba’s Yokkaichi flash memory plant in Mie Prefecture, filed a request for arbitration with the international court in May to block Toshiba from selling the unit on the grounds that the sale would breach their joint venture contract.

But as the legal process is likely to take more than two years, Western Digital has decided to seek an interim injunction that would temporarily halt the sale until a court decision is made.

Western Digital is set to file for a request within the next few weeks, according to sources, and believes a temporary order preventing Toshiba from selling the chip unit could be issued as early as the beginning of next year.

At one point, Toshiba had leaned toward a bid by the Western Digital group and went as far as reaching a broad accord with the company, but it eventually picked the Japan-U.S.-South Korea group after talks with Western Digital stalled.

Toshiba is expected to seal a deal with the Bain Capital-led group soon.

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