When you are facing economical problems the vultures will not take long to show up... I can't blame WD for trying to get the Toshiba share for lower than what others offer, they can always resell it afterwards and make a profit on it or keep it since the HDD part of WD is pretty much doomed.
(a) No-one sane wants to buy Toshiba as a whole, given their massive potential nuclear liabilities. (Remains unclear if Westinghouse scammed Toshiba, or Toshiba was incapable of managing the Vogtle construction properly. Doesn't help that Toshiba has been engaging in massive accounting fraud for the past few years...)
(b) Given all the above Toshiba is ALREADY bankrupt. WD isn't trying to do anything... The only issue is whether WD wants to pick up some small sub-unit (or two) of Toshiba --- no way in hell do the want the whole thing, along with all its lawsuits and liabilities...
The joint venture that is 49,9% owned by Western Digital is depending on the 50,1% owner to invest 50% of the money when it comes to expansions, refurbishing plants, buying equipment, R&D etc. Toshiba is contractually obligated to provide 50% of the cost for the venture, a new owner has to be prepared to do the same (and actually be able too) for it all to work out. Without that the plants that WD has spent billions on and own half of (it's the joint ventures that has developed the technology so Toshiba trying to say that they are stealing IP is retarded) will be worthless in a short amount if time. Toshiba can ruin everything for WD, WD can't really do the same for Toshiba. WD should be fine with other owners, but only owners that can continue to invest in the fabs.
It sounds to me like the terms of the joint venture give WD the power to deny any sell except the sell to themselves. That should make this case pretty simple. But since the business is sitting in Japan, who knows. Especially if the Japanese government is already mixed in with that consortium.
Actually Western Digital said during their last earnings call that they did not have first right of refusal on the joint venture. What is probably in the contract is an assignment clause which says they have to sign a consent to have the contract terms assumed by a new buyer of Toshiba. If they don't sign the assignment, the contract dissolves. This is a big miss by the Western Digital legal team. They should have had a first right of refusal into the contract as soon as they bought SanDisk. I'm no attorney but I wouldn't be surprised if Toshiba prevails on the interference case.
If that is the actual operating agreement then it looks like WD may have a claim under 4.1 (a) (iv). I'm just an armchair lawyer but it looks pretty pertinent to the case since a sale of Toshiba Memory would seem to be a transaction in which "the Company is a party resulting in a Change of Control of the Company". I suppose it all depends on how legalese defines what constitutes as as being a party of.
Good find. I'd caution against taking anything in that document as conclusive, because it appears to be fairly old (2010) and may have been amended especially as a result of the SanDisk acquisition. It also only governs one of at least three joint venture entities that exist between Toshiba and SanDisk, but nothing Western Digital and Toshiba have been saying recently indicates that there are important differences between the terms of the various joint ventures.
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Strunf - Thursday, June 29, 2017 - link
When you are facing economical problems the vultures will not take long to show up...I can't blame WD for trying to get the Toshiba share for lower than what others offer, they can always resell it afterwards and make a profit on it or keep it since the HDD part of WD is pretty much doomed.
Hurr Durr - Thursday, June 29, 2017 - link
>wd>vultures
Funny word for the company that is actually invested in the partnership.
Santoval - Thursday, June 29, 2017 - link
Western Digital is obviously trying to bankrupt Toshiba so that they buy them out at a firesale price. Sneaky and cunning or "It's just business?"name99 - Thursday, June 29, 2017 - link
Be careful in exactly what you are claiming.(a) No-one sane wants to buy Toshiba as a whole, given their massive potential nuclear liabilities. (Remains unclear if Westinghouse scammed Toshiba, or Toshiba was incapable of managing the Vogtle construction properly. Doesn't help that Toshiba has been engaging in massive accounting fraud for the past few years...)
(b) Given all the above Toshiba is ALREADY bankrupt. WD isn't trying to do anything...
The only issue is whether WD wants to pick up some small sub-unit (or two) of Toshiba --- no way in hell do the want the whole thing, along with all its lawsuits and liabilities...
Penti - Thursday, June 29, 2017 - link
The joint venture that is 49,9% owned by Western Digital is depending on the 50,1% owner to invest 50% of the money when it comes to expansions, refurbishing plants, buying equipment, R&D etc. Toshiba is contractually obligated to provide 50% of the cost for the venture, a new owner has to be prepared to do the same (and actually be able too) for it all to work out. Without that the plants that WD has spent billions on and own half of (it's the joint ventures that has developed the technology so Toshiba trying to say that they are stealing IP is retarded) will be worthless in a short amount if time. Toshiba can ruin everything for WD, WD can't really do the same for Toshiba. WD should be fine with other owners, but only owners that can continue to invest in the fabs.Chugworth - Thursday, June 29, 2017 - link
It sounds to me like the terms of the joint venture give WD the power to deny any sell except the sell to themselves. That should make this case pretty simple. But since the business is sitting in Japan, who knows. Especially if the Japanese government is already mixed in with that consortium.kellyH - Thursday, June 29, 2017 - link
Actually Western Digital said during their last earnings call that they did not have first right of refusal on the joint venture.What is probably in the contract is an assignment clause which says they have to sign a consent to have the contract terms assumed by a new buyer of Toshiba. If they don't sign the assignment, the contract dissolves.
This is a big miss by the Western Digital legal team. They should have had a first right of refusal into the contract as soon as they bought SanDisk.
I'm no attorney but I wouldn't be surprised if Toshiba prevails on the interference case.
asmian - Thursday, June 29, 2017 - link
"some employees from SanDisk to Western Digital whom have access to Toshiba confidential information"Please learn how/when to use "whom".
Bullwinkle J Moose - Thursday, June 29, 2017 - link
Hey WD,Just do to Toshiba what Toshiba is doing to you!
We are not stealing your trade secrets....
Those are OUR trade secrets!
We will begin licensing those trade secrets to every Company who is now in the bidding process
You will have access to the same technology for LESS than buying out Toshiba, AND, we will make more money than trying to bid for our own technology
You vont 2 Playyyyyyyyy?
masouth - Thursday, June 29, 2017 - link
http://corporate.findlaw.com/contracts/operations/...If that is the actual operating agreement then it looks like WD may have a claim under 4.1 (a) (iv). I'm just an armchair lawyer but it looks pretty pertinent to the case since a sale of Toshiba Memory would seem to be a transaction in which "the Company is a party resulting in a Change of Control of the Company". I suppose it all depends on how legalese defines what constitutes as as being a party of.
Billy Tallis - Thursday, June 29, 2017 - link
Good find. I'd caution against taking anything in that document as conclusive, because it appears to be fairly old (2010) and may have been amended especially as a result of the SanDisk acquisition. It also only governs one of at least three joint venture entities that exist between Toshiba and SanDisk, but nothing Western Digital and Toshiba have been saying recently indicates that there are important differences between the terms of the various joint ventures.