Western Digital now in pole position to buy Toshiba Memory

Word is going around that the tables have turned in the Toshiba Memory saga. The relationship between Toshiba and Western Digital got muddied since Toshiba unilaterally decided to spin off and sell its semiconductor business earlier this year. Western Digital claims the terms of the joint-venture between the companies prohibited this.

Lawsuits followed but it looks like Western Digital may now get its wish as it has emerged as the leading contender to acquire Toshiba's chip business. And that's precisely due to the legal uncertainty. Earlier this year, Toshiba approved a bid from a consortium that included INCJ, the Development Bank of Japan, Bain Capital and SK Hynix. But that deal fell apart due to the uncertainty of the outcome of Western Digital's lawsuit.

Western Digital is part of a new consortium that has offered about 1.9 trillion yen ($17.3 billion) for Toshiba Memory. Other parties in the WD-backed consortium include US private equity firm Kohlberg Kravis Roberts along with the government-backed Innovation Network Corp. of Japan (INCJ) and the Development Bank of Japan.

EE Times writes negotiation are in late-stages and that a deal is possible by the end of this month. According to Nikkei, Western Digital will initially have a stake of under 20 percent with no voting rights to help the deal fly past regulators:

According to the Nikkei report, plans call for Western Digital to ultimately take a stake of less than 20 percent in the unit after the deal clears regulatory reviews.Western Digital would not initially receive voting rights in the venture, the report states.