Toshiba Corp. (TOSYY) shares plunged to a near three-week low in Tokyo Tuesday amid speculation that the sale of its flash memory business could face further delays amid a dispute with its partner, Western Digital (WDC) and speculation that the government could step in to keep the operations under Japanese control.
Toshiba is attempting to sell its lucrative chip business in order to cover costs associated with the collapse of its U.S nuclear division, Westinghouse, and its subsequent Chapter 11 bankruptcy filing, but the process has been hampered by delays linked to the company's financial statements and a request by Western Digital to the International Court of Arbitration to block the sale.
WDC claims Toshiba breached joint venture agreements with its SanDisk unit by moving JV operations into a separate memory unit business in preparation for a disposal that could fetch as much as $20 billion.
Toshiba shares fell more than 12% in Tokyo to end the session at ¥230 each, the lowest level since April 28. The stock has plunged more than 50% since details of overruns at projects run by Westinghouse were first revealed in mid December.
The sale of the division -- the world's second-largest maker of NAND chips -- could be further complicated by speculation that the Japanese government may be prepared to offer loan guarantees to its state-backed fund, Innovation Corporation of Japan, in order to keep the group in domestic hands.
Japan's Trade Minister, Hiroshige Seko, told reporters in Tokyo Tuesday that it was "very important for Toshiba and Western Digital to cooperate" but insisted that his department wasn't going to intervene.