Western Digital Corp. (WDC) - Get Report has thrown further doubt over Toshiba Corp.'s (TOSYY) much-needed sale of its chip unit.

The company said it will not agree to a sale of the memory chip unit if the preferred bidding consortium includes rival chipmaker SK Hynix Inc.

Western Digital was market 2.36% higher in premarket trading to $95.54. Shares closed at $93.34 on Friday, June 23.

In a letter to Toshiba's board seen by Reuters on Monday Western Digital CEO Stephen Milligan said the company would not consent to a transaction with the proposed consortium.

Toshiba last week chose a group led by Bain Capital Private Equity LP, but also supported by government-backed investment funds that has offered ¥2 trillion ($18 billion) for the world's second-largest producer of NAND flash memory chips.

The group includes Korea-based SK Hynix, the Innovation Network of Japan and the Development Bank of Japan and appears to have won the bidding contest despite failing to meet the ¥2.2 trillion price proposed by a paring of U.S. chipmaker Broadcom Inc. (AVGO) - Get Report and Silver Lake Private Equity Partners.

Western Digital's June 25 letter said SK Hynix's participation in the consortium purchasing Toshiba's interests in their joint ventures "increases the likelihood of technology leakage and harm to the JVs going forward."

Toshiba is hoping to finalize the purchase agreement by June 28, the date of its annual shareholder meeting.

Toshiba CEO Satoshi Tsunakawa told a news conference on Friday that SK Hynix would not be holding any equity and would not be involved in management.

Toshiba's much-needed sale could be slowed -- or possibly cancelled altogether -- as a result of legal action from Western Digital, a joint partner of Tosbhia's that has consistently said the auction process violates prior agreements between the two companies. Western Digital's SanDisk unit owns a 49% stake in Toshiba's main chip plant in Yokkaichi.

"Toshiba Corporation continues to ignore both SanDisk's consent rights and the dual-track legal process currently underway," WDC said in a statement late Tuesday in San Jose, Ca. "The language of the relevant agreements is clear: Toshiba Corporation has no right to transfer its JV interests to a third party without SanDisk's consent. SanDisk has not given its consent to any transaction, and will continue to protect its JV interests and preserve its rights through both its request for injunctive relief and the arbitration process."

Tsunakawa also said he was open to talks with Western Digital over the sale.

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