back to article Toshiba must allow Western Digital access to joint-venture assets

Western Digital Corp has notched up another win in its attempt to force Toshiba to talk turkey about selling its Memory Business to WD, or a bid group with its JV partner in it. Like Gulliver being held down by myriad silken threads, mighty Toshiba is currently being hampered by yet another WDC legal action. The Superior …

  1. gypsythief

    I've never got my head around Economics...

    I've followed this saga from the beginning, and there is something I don't quite get...

    Toshiba lost a shed load of money when their Westinghouse Electric subsidiary underwent a Total Inability To Support Uranium Power ($8bn I think?)

    They want to sell their memory business to recover these losses, and seemingly would like the IP not to leak to the Chinese.

    Whoever buys the memory business for enough money for Toshiba to recoup their losses, must be confident of making enough money to both cover the purchase and then make a profit.

    If the memory business is so profitable, surely it's better for Toshiba to hang on to it? And if they need money now, can they not get a loan from the national bank (who I think are involved in a consortium to bid for the memory business from Toshiba (to keep it from Chinese hands)), and pay the loan off with profits from the apparently lucrative memory business?

    As I said, I've never got my head around economics...

    1. Raphael

      Re: I've never got my head around Economics...

      the memory business may be profitable enough to attract a buyer, but it's not profitable enough for Toshiba to generate the cash it needs in time to avoid delisting on the Tokyo stock exchange.

      And getting the loan would be trading one set of debt for another which is the problem they have at the moment.

  2. eldakka

    If Toshiba really want to sell the memory business...

    The problem with them selling it is the JV agreement with Sandisk.

    From other reports, it seems that there is a clause in the JV that says something along the lines of needing permission from the JV partner to sell off any interest in the JV, and WDC (via it's Sandisk subsidiary) is refusing that permission.

    Now, Sandisk got around needing Tosh's permission because Sandisk hasn't sold/transferred any if its share of the JV assets to WDC, it sold the entire company, Sandisk, to WDC, not the JV assets. Sandisk still owns and is the partner in the JV, it just so happens that now WDC owns Sandisk outright. So whenever writers or people say "WDC isn't allowing...", what they mean, technically and legally, is that Sandisk isn't allowing it. It just so happens that WDC can order Sandisk what to tell Tosh.

    Based on the above, then the following, or some variation of, may work if Tosh really want to sell it's share of the JV:

    It could create a new company, say ToshibaSan, and transfer (via whatever legal means companies spin off subsidiaries etc.) all the non-JV assets/liabilities, all the ones it needs to keep, to the new ToshibaSan. Then it could change the names of the companies, rename Toshiba to FUWDC, and then rename ToshibaSan to Toshiba (so it can keep the name if it wants to). Then it could sell the 'old' Toshiba, now called FUWDC, that now only consists of the JV elements, to whoever wants to buy that company, in its entirety, selling the company that happens to contain the JV assets.

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