Toshiba Corp. and its joint venture partner Western Digital Corp. have effectively agreed to settle a dispute over the sale of the Japanese company's chip business, ending a long legal battle, sources with knowledge of the matter said Monday.
Western Digital will drop its legal action aimed at blocking the sale of Toshiba Memory Corp., a decision that removes a major concern for the Japanese conglomerate to complete the deal as part of its restructuring plans.
The companies are working out the final details of the agreement and will announce a deal as early as Tuesday, the sources said.
The U.S. hard disk drive maker had claimed that selling Toshiba Memory to a third party without its consent would breach their contract.
The cash-strapped Japanese company is seeking to raise cash through the sale of the chip unit to eliminate a negative net worth by the time its business year ends in March and avoid having its shares delisted from the Tokyo Stock Exchange.
As the legal action could have delayed the sale, Toshiba had to look to another fund-raising measure. The company last week raised 600 billion yen ($5.3 billion) through a third-party allocation of new shares with 60 overseas investment funds.
In September, Toshiba decided to sell Toshiba Memory shares to a Japan-U.S.-South Korean group led by U.S. fund Bain Capital. The consortium includes the state-backed Innovation Network Corp. of Japan and Development Bank of Japan, and South Korean chipmaker SK Hynix Inc.
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