Western Digital takes legal step to stop Toshiba memory investment

FILE PHOTO: A Western Digital Corporation hard drive is pictured here in Encinitas, California April 19, 2011. REUTERS/Mike Blake/File Photo

(Reuters) - Western Digital Corp WDC.O filed its latest legal action against joint-venture chip partner Toshiba Corp 6502.T for moving to invest in a new flash memory production line without its help, the U.S. company said on Wednesday.

The new arbitration requests, filed in the International Court of Arbitration that oversees the companies’ agreement, seeks to stop Toshiba from investing in the so-called Fab 6 facility in Yokkaichi, Japan, unless Western Digital’s subsidiary Sandisk is also allowed to invest.

The court, a branch of the International Chamber of Commerce, is an institution for the resolution of international commercial disputes.

In a statement in August, Western Digital asserted it had the right to co-invest and had said it was “disappointed” in Toshiba’s decision in August to proceed on its own. On Wednesday, Western Digital said its hand was “forced.”

“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,” the company said in a statement.

Toshiba did not immediately respond to a request for comment about the latest dispute. It said in August it had tried unsuccessfully to reach agreement with SanDisk on a joint investment and would move forward without SanDisk.

The companies have battled for months over Toshiba’s efforts to sell its memory unit to raise cash to plug a hole in its finances caused by its bankrupt U.S. nuclear unit, Westinghouse.

Toshiba officials said earlier on Wednesday they had sealed a deal to sell the flash memory unit for $18 billion to a consortium led by U.S. private equity firm Bain Capital LP that also included Apple Inc AAPL.O, helping to keep the Japanese conglomerate's listing on the Tokyo stock exchange.

Toshiba’s shares were down 1.3 percent to 311 yen in early trading in Tokyo.

Reporting by Stephen Nellis in San Francisco; Editing by Richard Chang and Peter Cooney