Western Digital (WDC) stock broke out Friday after Japan-based Toshiba said it was open to settling a dispute over the sale of a chip business the two jointly run.
Western Digital gained a stake in the operation, which makes an advanced form of flash-based memory chips, as a result of its $15.8 billion SanDisk acquisition. Toshiba on Tuesday had announced it would sell the unit to a consortium that includes Korea-based SK Hynix and Bain Capital Japan. The group reportedly bid $19 billion for the chip unit.
Western Digital, a leading provider of disk drives and memory chips, has been adamant that Toshiba can't sell the unit without its permission. Among Western Digital's concerns is that its intellectual property associated with the joint venture will be shared with competitors.
Western Digital filed for arbitration in May to prevent Toshiba from selling its stake. A bid by Western Digital to acquire the chip unit was previously rejected by Toshiba.
Western Digital stock was up 3.4% to 93.34 in the stock market today, hitting a two-year high of 95 intraday.
IBD'S TAKE: Western Digital stock is up 170% after hitting a five-year low one year ago. The stock has a strong IBD Composite Rating of 98 out of a possible 99, based on a variety of performance metrics.
Bids for the chip unit included one from Broadcom (AVGO) and another by Foxconn, in conjunction with Apple (AAPL) and Dell (DVMT).
Western Digital has sought a U.S. court injunction to prevent any deal that does not have its consent.
"The language of the relevant agreements is clear," Western Digital said in statement issued the same day Toshiba announced the winning bidder.
"Toshiba has no right to transfer its joint-venture interests to a third party without SanDisk's consent," it said. "SanDisk has not given its consent to any transaction, and will continue to protect its joint-venture interests and preserve its rights through both its request for conjunctive relief and the arbitration process."
Western Digital said Toshiba has acknowledged and validated SanDisk's consent rights on multiple occasions.
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