The Western Digital And Toshiba Saga Is Far From Over

Western Digital, along with its bidding partner private equity player KKR & Co, has submitted another offer for Toshiba's flash memory unit in a last-ditch effort to prevent Toshiba from signing a deal with its preferred buyer/bidder comprised of a group led by the two Japanese government affiliates and includes Bain Capital.

How much Western Digital has offered in its newly submitted offer is not clear or made public, but one can assume that it will more than likely be higher than the supposed $2 trillion or $18 billion offer on the table from the preferred consortium.

Toshiba has stated that they will sign the deal overnight (Wednesday in Japan), which will coincide with its shareholder meeting tomorrow. They might as well try and give the shareholders a small gift given how upset they will be with management. With this new bid from Western Digital, maybe there's now a fly in the ointment.

Late Tuesday, Western Digital released the following brief statement, "Western Digital resubmitted a bid with KKR where Western Digital will provide debt financing to facilitate a sale by Toshiba Corporation of its interests in the NAND Flash Memory joint ventures. Western Digital continues to believe it is the best partner to advance Toshibas legacy of technology innovation in Japan."

It seems like the government of Japan wants to be involved in the process so Western Digital might have to include the Innovation Network Corp of Japan and the Development Bank of Japan, as part of its consortium if it has any chance of getting approval from the government there. The latter two are already part of Toshiba's "preferred bidder group."

It will be interesting to see how things pan out for Western Digital. I have received a few emails from readers saying that Western Digital should just let the issue drop rather than overpay (their assertion) for Toshiba's flash business.

My response is based on two points. First, Western Digital has the right of first refusal per the agreement signed between Sandisk and Toshiba when they set up the JV. Second, I am sure the $18 billion-plus it will take to get the asset has been determined to be a price worth paying by Western Digital management.

From Toshiba's point of view, this thing needs to be cleared up as soon as possible as well.

We shall see how things develop overnight and whether this new bid from Western Digital prevents Toshiba from signing a deal wit the preferred bidder group.

(No positions)

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