TOKYO (Reuters) – Toshiba Corp (6502.T) and Western Digital Corp (WDC.O) have agreed in principle to settle a dispute over the Japanese firm’s plans to sell its $18 billion chip unit and aim to have a final agreement in place next week, sources familiar with the matter said.
The board of the embattled Japanese conglomerate approved a framework for a settlement on Wednesday, one of the sources said.
The potential for Western Digital – Toshiba’s partner in its main semiconductor plant and jilted suitor in the auction – to block a deal has been seen as the main obstacle to the planned sale of the unit to a Bain Capital-led consortium.
The settlement under discussion calls for Western Digital to drop arbitration claims seeking to stop the sale in exchange for Toshiba allowing it to invest in a new production line for advanced flash memory chips that is slated to start next year, two sources said.
All sources declined to be identified as they were not authorized to speak to the media.
A Toshiba spokesman said that while the company was open to a settlement, it would not disclose discussion specifics or details of board of directors meetings. “It is not a fact that we have reached an agreement with Western Digital,” he said.
Western Digital declined to comment.
Toshiba was forced to put the unit – the world’s no. 2 producer of NAND chips – on the block to cover billions of dollars in liabilities arising from its now bankrupt U.S. nuclear power unit Westinghouse.
The deal with the Bain-led consortium will, however, see it reinvest in the unit and together with Hoya Corp (7741.T), a maker of parts for…