Western Digital has been opposed to the sale to Bain, and threatened to block any moves in that direction through legal action, citing joint venture agreements between the two companies that it says gave it first bidding rights.
He said the plan would ensure TMC has the resources it needs to compete in the flash memory market, which is growing quickly with advances in artificial intelligence and networks for products that have Internet connections, known broadly as the Internet of Things.
With data storage key to most next-generation technologies, demand for NAND chips has skyrocketed.
Toshiba had stepped up pressure on Western Digital in recent weeks. Western Digital is also the world's largest provider of disk drives.
The financially-troubled Toshiba, which took a major bath over a disastrous attempt to break into the U.S. nuclear energy market, announced it would spin-off its semiconductor arm, minus its imaging sensor business, in January this year.
A peace has broken out between Western Digital and Toshiba over the future of their solid-state-memory factory joint-ventures. The agreement announced Tuesday protects those intellectual-property interests, Western Digital said.
The two companies said they've reached "a global settlement agreement to resolve their ongoing disputes in litigation and arbitration, strengthen and extend their relationship, and enhance the mutual commitment to their ongoing flash memory collaboration". After the deal was announced, Western Digital raised guidance for the current quarter and its full fiscal year. Over the course of several months as the severity of Toshiba's financial situation became clearer, their plans shifted to a complete sale of the memory business, valued around $18 billion. Estimates call for EPS of $13.18 on sales of $20.34 billion. -South Korea consortium, with Western Digital not being a participant, for ¥2 trillion. Shares initially climbed 5%.
To maintain Toshiba Memory's competitiveness, it is considered better for Toshiba to jointly invest with Western Digital.
"Western Digital remains positioned to sustain upside through 2018 as we see a favorable Nand environment with limited risk of oversupply", Daryanani wrote in a research note to clients Wednesday.
As part of the agreement, Western Digital will be able to invest in Fab 6, which is being built at Yokkaichi.
The settlement calls for Western Digital to cease arbitration claims seeking to halt the sale to the Bain consortium in exchange for Toshiba allowing the USA partner to invest in a new production line starting next year for advanced memory chips.