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Toshiba shares jump 22 per cent as Western Digital ruling is set for July 28

Rob Horgan
Toshiba shares jump 22 per cent as Western Digital ruling is set for July 28

Toshiba’s drawn-out sale of its valuable memory chip unit could be nearing a dramatic finale. The latest date to look out for is July 28, as that is the date that the Superior Court of San Francisco will now rule on Western Digital’s attempts to block the deal. The court original heard the case on July 14, but the judge has asked for two additional weeks to come to a decision.

And investors clearly think that the court is ready to come down on Toshiba’s side, with shares jumping by more than 22 per cent yesterday. While Toshiba admits that ‘there is no chance of closing the deal within the next two weeks’, once the ruling is out of the way there should be nothing stopping the Japanese tech giant from cashing in on an estimated $18 billion sale. The company added that in the meantime it ‘can and will continue to negotiate and sign an agreement with bidders for the deal’.

Western Digital’s decision to take legal action came after months of souring relations between the business partners which at times has threatened to bubble over. Toshiba and Western Digital currently jointly operate Toshiba’s main semiconductor plant. Western Digital is in fact one of the parties interested in acquiring the chip unit from Toshiba, however the firm has reportedly put in a much lower offer than other suitors. The legal wrangling could have scuppered any deal for Toshiba, effectively losing them $18 billion. However, investors have remained interested and a deal now looks likely to go through in August.

Toshiba is desperate to close the sale in an effort to plug a ¥600bn ($5.3bn) loss in its shareholder equity. Toshiba’s financial woes are largely connected to its failed nuclear unit Westinghouse. Acquired in 2006, an ill-advised purchase in 2015 has led to massive scandal and loses for its parent company. Earlier this year Westinghouse filed for a Chapter 11 bankruptcy and Toshiba is attempting to split from the company. Since revealing its financial turmoil a number of investors have shown an interest in Toshiba’s technology businesses. Many suitors have tabled offers to invest in the firm’s profitable chip manufacturing business.

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Tags: Toshiba, western digital, Vendors, memory, deal, Westinghouse, court battle

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