Toshiba Corp. and Western Digital Corp. (WDC) - Get Western Digital Corporation Report have resolved a dispute over the former's ¥2 trillion ($17.7 billion) sale of its memory chip business to a group led by Bain Capital LLC, the companies said Tuesday after the market close. Western Digital has joint ventures with the memory chip business, and had argued that the sale violated its rights.
Western Digital Chief Executive Officer Steve Milligan said the settlement "strengthens, extends and enhances" a 17-year partnership that is "one of the most successful JVs in the history of the tech industry" during a Tuesday call.
Bain leads a diverse consortium named KK Pangea, in reference to the geological super-continent that existed before the continents split.
The co-investors include U.S. tech companies Apple Inc. (AAPL) - Get Apple Inc. (AAPL) Report , Dell Technologies Capital, Kingston Technology Co. and Seagate Technology plc (STX) - Get Seagate Technology PLC Report , South Korean chipmaker SK Hynix and Tokyo tech group Hoya Corp., which are joining Bain in the bid to acquire Toshiba Memory Corp. Japanese public-private business support group Innovation Network Corporation of Japan and the Development Bank of Japan Inc. may also invest.
Toshiba explored a sale of the memory business earlier this year after its U.S. nuclear business sought Chapter 11 bankruptcy protection and larger-than-expected losses caused the company to warn that it might not continue as a going concern.
Western Digital has joint ventures with Toshiba's chip business through its $19 billion purchase of SanDisk Corp. in 2015. The company argued that Toshiba does not have the right to sell interests in the ventures without its consent.
In May, Western Digital applied for arbitration through the ICC International Court of Arbitration, and it later sought an injunction in the Superior Court of the State of California for the County of San Francisco.
"That was not our preferred path," Milligan said Tuesday. Western Digital had concerns about intellectual property and transfers of equity by the new owners, which Milligan said the settlement addresses. The pact also extends the life of the partnership.
With the row sorted out, Milligan said the JVs will produce memory for artificial intelligence and virtual reality with application ranging from self-driving cars to automated factories.
Asked during the call if the investors would be able to share the intellectual property, the Western Digital CEO responded, "The answer is no."
Toshiba plans to close the sale of the memory unit by the end of March 2018.
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Editor's Pick: This article was originally published on Dec. 13 at 7:15 am ET