Personal relationships are complex. Business relationships can be even worse. What’s so frustrating about them, is the great opportunity for potential. Two companies, providing goods and services which benefit the other, and vice versa, can be a tremendous asset to eaches bottom line. In other words, when it’s good, it’s really good. But the opposite is true for when the relationship goes sour. This is the case with the partnership between Western Digital and Toshiba.
The two tech giants, who had previously been partnering together, have been in a bit of a well documented rough patch. The latest development in the business soap opera is that Western Digital and Toshiba are in a legal battle. The reason is that Toshiba has invested in a new flash memory production line, without the aid and inclusion of Western Digital subsidiary, Sandisk.
The action was announced by Western Digital on Wednesday, and filed in the International Court of Arbitration, the group that manages the joint partnership between Western Digital and Toshiba. Western Digital’s goal is to stop Toshiba from investing in the Fab 6 facility, located in Toshiba’s home country of Yokkaichi, Japan. Western Digital is taking the legal action because they are claiming that Toshiba has not let Western Digital’s subsidiary, Sandisk, also invest in the facility.
The International Court of Arbitration is a branch of the International Chamber of Commerce, which is an organization designed to intervene and help bring resolution to international business disputes. To return to our relationship example, the International Court of Arbitration is like marriage counseling for high profile businesses. And Western Digital has called for couples counseling.
Western Digital’s claim is that their business relationship gives them the opportunity to “co-invest” and said they were “disappointed” when Toshiba chose to invest autonomously apart from the partnership of Western Digital. In their statement made Wednesday, Western Digital believed they had no other choice, claiming that their hand was “forced”. Western Digital’s statement on the matter went on, “It is unfortunate that SanDisk is forced to initiate binding arbitration to remedy Toshiba’s retaliatory breach of the (joint-venture) agreement entered into by both SanDisk and Toshiba,”
Like in every couple’s argument, there are two sides to every story. Toshiba’s side is that they’ve been trying to reach an agreement with Western Digital for some time regarding the investment, but thus far have been unsuccessful. Thus they were forced to continue with the partnership of Sandisk.
Again, just like with every couple’s argument, there is always a bigger unresolved issue that is causing all the conflict. In the case of Western Digital and Toshiba, it has to do with selling of the memory unit, in order to cover the bankrupt nuclear unit, Westinghouse.
This came after Toshiba had come out on Wednesday, saying they had finalized a deal to sell their memory unit for a whopping $18 billion to a group of businesses, led by Bain Capital LP. Apple Inc was in on the deal. The sale was important to Toshiba, as the influx in cash allowed them to remain on the Tokyo stock exchange. That being said, their shares were down 1.3 percent.
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