A California court has put on hold its decision on an injunction request by Western Digital Corporation (WDC) to block the sale of Toshiba's memory division, giving another headwind to a multinational preferred bidder comprising of South Korea's memory chipmaker SK Hynix and US and Japanese entities. While Toshiba needs to raise cash to stay afloat following losses in its nuclear division, Western Digital has sought to block the deal on concerns the chip unit may end up with competitors.
In late June, Toshiba announced its preferred bidder was a group made up of Bain Capital, South Korean chip maker SK Hynix and Japanese-government backed banks that offered $18 billion (roughly Rs. 1,15,843 crores). The court did not accept the WDC's injunction request but the hearing postponement and the two weeks' notice suggestion could be interpreted as a swing factor for WDC in a tight contention with the alliance. The Superior Court of California suggested the companies work on a proposal for providing Western Digital with two weeks' advance notice of the sale and did not rule on the USA company's injunction request.
Some speculate that the talks between Bain-led consortium and Toshiba fell into a deadlock on June 28, because of SK's proposal to fund the deal through convertible bonds worth about $4.6 billion, which is deemed a step that could eventually give SK hynix an equity interest in Toshiba.
Toshiba would proceed with negotiations and contract signing in the meantime, the Tokyo-based company said.
But Park Sung-wook, vice chairman of SK Hynix, met reporters on July 12 and said, "We are not considering giving up the takeover at all".
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The two sides could not agree, so Judge Kahn instructed them to come up with final language for his proposed order and set a new hearing for July 28, when a related dispute between the two will be heard.
"Our entire goal was to preserve and protect our rights through the binding arbitration process and that's precisely what the court has done today", Western Digital CEO Steve Milligan said in a statement.
Meanwhile, the Californian Federal Court in San Francisco of the USA collected opinions from both sides in the first trial in a lawsuit against the sale of Toshiba Memory filed by WD on July 14.
SK Hynix refused to confirm any of the media reports concerning the deal. As per a joint venture with Western Digital which helps finance equipment at Toshiba's plants, Western Digital has also invoked separate arbitration proceedings.
Shiga noted that a voting stake for SK Hynix was not included in the consortium's framework when INCJ won approval to participate, according to Japan's JiJi Press on Saturday.
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