Japan's Toshiba Corp holds the annual shareholders' meeting in Chiba, yesterday.
Tokyo: Toshiba Corp sued Western Digital Corp. in a Japanese court, asking for 120bn yen ($1.1bn) in damages and seeking to stop the US company from interfering in the sale of its chip unit, escalating a legal tussle between the companies.
The litigation, filed yesterday in Tokyo District Court, seeks to stop Western Digital from making ownership claims over the enterprise that Toshiba is trying to sell. The Japanese company said in a statement that Western Digital’s employees improperly obtained proprietary information.
The relationship between Toshiba and Western Digital has gotten more acrimonious, as Toshiba moves toward a sale of the flash-memory division. Last month, Western Digital invoked an arbitration clause in their business agreement, seeking to block Toshiba’s transfer of ownership of the unit to a separate legal entity in preparation for a sale. Toshiba, which has since reversed that transfer, then had its lawyers send a letter demanding that the US company stop its “harassment” as Toshiba tries to sell the business.
“Toshiba has made very clear that they want to move the process along without Western Digital’s obstruction, which, frankly, hasn’t been particularly constructive,” said Damian Thong, an analyst at Macquarie Group Ltd. “This clearly highlights the deterioration of the relationship between the two partners.” A representative for Western Digital, which has said that Toshiba needs its consent to complete the sale, declined to comment. Toshiba shares declined 1.8 percent at the close in Tokyo Wednesday.
The escalating standoff between the companies over the chip sale could disrupt Toshiba’s plans to use cash from the divestment to plug a hole in its balance sheet from a massive loss in its nuclear power business.
