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TOKYO (Reuters) - Western Digital Corp has told Toshiba Corp that it will not agree to a sale of the Japanese conglomerate's prized memory chip unit to a preferred bidding consortium that includes rival chipmaker SK Hynix Inc.
Western Digital, which jointly runs Toshiba's main semiconductor plant, has been feuding bitterly with its Japanese partner over the $18 billion sale and has sought a U.S. court injunction to prevent any deal that does not have its consent.
"I must make it clear that Western Digital will not consent to a transaction with the proposed consortium," CEO Stephen Milligan said in a letter sent to Toshiba's board.
The June 25 letter, seen by Reuters on Monday, said that SK Hynix's participation in a consortium purchasing Toshiba's interests in their joint ventures "increases the likelihood of technology leakage and harm to the JVs going forward."
Toshiba last week chose a consortium of Bain Capital and Japanese government investors as preferred bidder for the unit, the world's No. 2 producer of NAND flash chips.
The South Korean chipmaker, which is relatively weak in NAND flash memory chips, will provide half of the 850 billion yen ($7.6 billion) that Bain plans to put up in the form of financing, sources have said.
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 - an arrangement that was unlikely to raise regulatory red flags and would prevent leaks of key technology information.
Toshiba is rushing to clinch an agreement by June 28, the day of its annual shareholders meeting.
Reporting by Makiko Yamazaki; Editing by Edwina Gibbs